COVID-19 Crisis Funding Support for South African Businesses

A brief guide on financial support and payment holidays

MEMSA is well aware that its members have been severely affected by the COVID-19 pandemic and national shut-down. Government and the private sector are collaborating to limit negative impacts of the pandemic on businesses, our economy and society.

Below is a brief guide on financial support and tax breaks. The final sections cover non-financial support, and how to supply essential products and services to government.

1.IS YOUR BUSINESS UNDER STRESS DIRECTLY DUE TO THE COVID-19 OUTBREAK?

SME Debt Relief Fund

  • Department of Small Business Development
  • Working capital, stock, bridging finance, order finance & equipment finance.
  • Amount based on business needs, interest rate of prime -5%,
  • Preference will be given to women and youth applicants.
  • Register on smmesa.gov.za, then email application form and required documents.

IDC Relief funding for distressed businesses (for larger enterprises)

  • Businesses within the IDC mandate that as a direct or indirect result of the COVID-19 pandemic are:

– Reasonably unlikely to be unable to pay their debt as it becomes payable

– Unable to afford their operating activities

  • Requires strong business plan, and play to recover within 18-24 months
  • Risk must be shared with other funders, not only the IDC
  • IDC assistance can take form of a loan or guarantee, with scheme-related concessionary pricing
  • visit your local IDC office for advice and to submit your application (Telephone: 0860 693 888) or submit your application in writing online at www.idc.co.za

Sukuma Relief Fund – Business Partners (SMEs)

  • Available for all industries but must have evidence of financial viability prior to Covid-19 as well as be tax & regulatory compliant.
  • R25,000 grant and CCs, companies and trust have access to unsecured, interest bearing soft loan.
  • https://finance.businesspartners.co.za/welcome-to-the­sukuma-relief-programme/

Note: this fund has been CLOSED for appliations as from the 6th of April, and will only re-open if current applicants are found ineligible and funds are not fully allocated, or if additional capital is added to the fund.

2.ARE YOU STRUGGLING TO PAY SALARIES DUE TO THE LOCKDOWN?

Covid-19  guaranteed loan scheme

  • National Treasury, the South African Reserve Bank and commercial banks
  • Covid-19 loans eligible SMEs with an annual turnover of less than R300 million.
  • Funds for operational expenses such as salaries,rent and lease agreements, contracts with suppliers, etc.
  • Loans to cover up to three months of operational costs and will be drawn down monthly.
  •  Six-month repayment holiday commencing from the first drawdown with interest accumulating from the date of the first drawdown.
  •  Interest and capital repayment starts after six months with a maximum of 60 months to do full payment
  • You can access loan scheme brochure here: https://memsa.org.za/20200424-loan-guarantee-national-treasury-important/

 Contact your bank for further details on applications and eligibility criteria or National Treasury at 012 315 5757 

SA Future Trust (SAFT) for Standard Bank, Nedbank, FNB and Absa clients

  • Salary support for SMEs < R25 million annual revenue.
  • Must be under stress directly due to Covid-19 outbreak and in strong financial position prior to crisis.
  • Interest-free loan with 5-year term, paid directly to employees from banks.
  • R750 per qualifying employee per week, over a max period of 15 weeks, or R11 250 per permanent employee
  • Standard Bank, Nedbank, FNB and Absa to manage applications and weekly payment (apply directly at your bank).

More information available at https://opp-gen.com/saft.

UIF Covid-19 Temporary Relief Benefit – All companies who have to enforce lockdown

  • Temporary UIF relief fund, claims for 3 months or less.
  • You need to be up-to-date with all UIF payments
  • Employee will be paid in terms of the income replacement rate sliding
    scale (38% -60%) as provided in the UI Act, max R17 712 per month.
  • Businesses to apply on behalf of employees.

Please send an email to Covid19ters@labour.gov.za to receive the most updated documents and guidelines in order to use the online system.

https://uifecc.labour.gov.za/covid19

This is a link to the online application system which is very fast and effective. Companies who have not registered for the TERS fund, and are UIF compliant, can register and you should get confirmation the same day with a document to be signed and submitted.

It is essential that applications are complete and files are submitted in the required format.Queries and complaints should be made to Covid19TersSupport@labour.gov.za, please also notify MEMSA of any problems experienced.

3.IS YOUR COMPANY ABLE TO SUPPLY ESSENTIAL MEDICAL EQUIPMENT AND SERVICES? (also see final section on how to become a supplier)

IDC COVID-19 Essential Supplies Intervention

  • Soft loan for companies for the acquisition and/or the manufacturing of essential supplies on an urgent basis to combat the Covid-19 pandemic.
  • Short-term (3 month) loans available for once off- contract or import
  • Must have contract orders in place or proof of demand.

More information is available at https://www.idc.co.za/2020/03/24/idc-interventions-in-response-to-covid-19/

SME Growth & Resilience Fund

  • Working capital (only direct costs), stock, bridging finance, purchase order finance and capital equipment finance for SMMEs (gov definition per sector) that manufacture locally or supply items which are in demand due to the pandemic.
  • Loan facilities provided at Prime – 5% pa.
  • Priority will be given to businesses owned by Women, Youth and People with Disabilities
  • Register at smmesa.gov.za
  • Then send application form and required documents per email.

NEF Covid-19 Fund (National Empowerment Fund)

  • Funding for working capital, machinery and equipment to manufacture and supply a range of medical products.
  • R500 000 to R10 million concessionary loan for black-owned businesses with existing retail supplier relationships.
  • Up to 60 months repayment, 0% interest in first year.

Applications open through NEF website www.nefcorp.co.za

4.WHAT TAX RELIEF DOES THE GOVERNMENT PROVIDE?

PAYE

Businesses with a turnover of <R50 million will be allowed to delay 20% of their PAYE liabilities over the next 4 months.

ETI (Employment Tax Incentive)

All businesses, regardless of size, can apply for extended and increased ETI claims. ETI payouts changed to monthly.

Tax subsidy

Employees who earn R6,500 or less will receive a tax subsidy of R500 per month over the next four months.

Provisional tax

For IRP601 return (1st provisional tax return of 2020/ 2021) You will be required to pay only 15% of your total estimated provisional tax.

More details on VAT relief on essential goods and imports available on the SARS website www.sars.gov.za

5.HOW ARE BANKS ASSISTING?

ABSA

ABSA has announced a “comprehensive customer, business and corporate relief programme”. This involves reduced or no repayments for a period of 3 months – upon approval by the bank. You have to apply for this assistance.The programme is active as of 30 March 2020. More information here.

FNB

FNB are providing assistance through their mobile app, which now has a COVID-19 icon. Assistance over April – June will cover:

A payment holiday for customers with turnover less than R20 million for up to 3 months; credit insurance claim assistance; and bridge finance facilities on an individual per-case basis. More facilities may be added over time, information here.

Standard Bank

Standard Bank’s assistance is largely aimed at its SME clients, with turnover of less than R20 million annually: a “Payment Interruption Scheme” for business loans, as well as a three month payment holiday on personal loans to business owners. More information here.

Nedbank

Nedbank will consider payment holidays on a case-by-case basis, and has reduced fees for early withdrawal of investments to alleviate cash flow issues.More information here.

6.WHERE CAN I OBTAIN FURTHER INFORMATION AND ASSISTANCE WITH DOCUMENTATION?

CIPC Essential Services Certificate

These can be obtained from:

  • MEMSA Members who need to increase the number of employees reflected on their certificate may contact MEMSA for assistance.

SEDA (the Small Enterprise Development Agency) regularly uploads government documents providing COVID-19 related guidance and information to small enterprises here: www.seda.org. Some of the information is relevant to all businesses.

Fundinghub.co.za maintains a very detailed set of information on COVID-19 resources and assistance, sign up to their newsletter to receive updates: https://www.fundinghub.co.za/covid19-resources

Business Advice for SMEs: The SA Venture Capital and Private Equity Association matches SMEs with needs for advice with members who are volunteering to assist for free on areas including marketing, legal, or financial challenges, apply at https://covid-19.savca.co.za/

7.HOW CAN I SUPPLY MEDICAL EQUIPMENT TO GOVERNMENT?

Small businesses can submit proposals to the Department of Small Business development by 30 April at 16h00.

  • Register on smmesa.gov.za
  • Hygiene and medical supplies and related services detailed RFQ can be found here
  • Non-food supplies and related services detailed RFQ can be found here
  • SEDA (the Small Enterprise Development Agency) regularly uploads documents providing COVID-19 related guidance to small enterprises here: seda.org

Covid19 Manager (Supplier Registration Portal by Business South Africa)

  • ALL businesses who are able to supply correctly certified medical equipment (manufactured locally or imported) should register.
  • Register here https://covid19manager.co.za/ and once vetted provide information on available products and prices.
  • The current focus is on biohazard bags; disposable aprons; surgical masks; face shields; goggles, protective eyewear; gloves; handheld thermometers; hand rub / sanitizer; patient ventilators for critical care & protective coverall / suits, though some other products are also considered.
  • Suppliers will be contacted as required to provide equipment for public and, where needed, private hospitals, purchases are funded by the Solidarity Fund.