South African business owners have had to become disaster management professionals overnight as a result of the effects of COVID-19 pandemic and resulting government lockdown. Each business is now facing their own set of challenges and backup plans.
It all seems overwhelming and to make it a bit simpler, Dupwest Inc has compiled this brief snapshot of relief / funding resources that are available to all South African business owners and we further will now be offering assistance to businesses affected by the COVID -19 pandemic to apply for the resources that we highlight in this article.
1. SOUTH AFRICAN FUTURE TRUST (SAFT)
1.1. Initiated by the Oppenheimer Family Trust, the SAFT allows for SMME’s to apply for interest free loans repayable over a period of 5 years, allowing businesses to continue with their operations whilst retaining their employees by allowing for the payment of salaries.
1.2. The terms of the loans can be negotiated in regards to the repayment of the loan once the Covid-19 pandemic is over.
1.3. The SMME itself must apply to any one of the partner banks for the loan and the loan will be used to pay the salaries of eligible employees. In order for a business to be eligible for the funding, it must have an annual turnover of less than R25 million and trade for a period of at least 2 years.
1.4. In the event that a business is approved, the SAFT will transfer funds directly to the employees themselves. The employees themselves will carry no liability and will not have to pay back the money. Qualifying businesses will receive an amount of R750 per week for every eligible employee over a period of 15 weeks, or R11 250 per permanent employee.
2. SMME DEBT RELIEF FUND
2.1. A fund aimed at providing relief in existing debts and repayments to assist SMME’s during the national state of disaster. The fund is managed by the Department of Small Business Development and offers working capital, stock, bridging finance and equipment finance. This is a soft loan and businesses may apply for financing at an interest rate of prime minus 5%. The total fund amount available is currently R500 million.
2.2. SMME’s that are experiencing financial stress due to Covid-19 and were financially stable prior to the Covid-19 disruptions.
2.3. Businesses that apply should be:
2.3.1. 100% owned by South African citizens;
2.3.2. employees must be made of up of at least 70% South African nationals; and
2.3.3. the business must be registered with SARS and be tax compliant.
2.4. Businesses can apply by registering online on the SMME South African website, downloading the application form and emailing the completed form to firstname.lastname@example.org.
3. FIREBIRD SMME REVITALISATION FUND
3.1. FyreFem Fund Managers in collaboration with Business Rescue Partners have founded this fund to provide SMME’s and SME’s with a combination of funding and strategic input over the period of the following 24 months.
3.2. The fund offers back office support for small companies and further offers various instruments such as debt and equity. The key goals of the fund can be spilt into long term, medium term and short term, namely -
3.2.1. Short -Medium term goal of assisting vulnerable SMME’s and keep businesses going and
3.2.2. Long Term goal of minimizing and softening the impact of COVID-19 on jobs and the GDP of South Africa.
3.3. The fund currently offers a grant output of up to R750 000 for SMME’s and a loan output of up to R750 000 – R15 million rand for SME’s. The start date for the fund has as of yet not been announced. Applications will be done online.
4. SUKUMA RELIEF PROGRAMME
4.1. The Sukuma Relief Programme is a response by the Rupert Family and Remgro Limited to the call by the President for social partners to support SME’s in sustaining their businesses and preserving jobs. the Sukuma Relief programme offers financial aid to sole proprietorships, close corporations, companies and trusts.
4.2. The Programme offers:
4.2.1. For sole proprietorships, a non-repayable grant of R25 000 per qualifying business to pay for overheads;
4.2.2. For companies, close corporations and trusts, unsecured interest-bearing loans of between R250 000 and R1 million coupled with a non-repayable grant of R25 000 per qualifying business. the loan portion shall be interest free for a period of 12 months with no repayment obligations during this period. After the 12-month period referred to herein, the loan shall be repayable and will incur interest at the prime rate from month 13. There is also no security requirement for the loan.
4.2.3. Due to the high number of initial applications that the Programme has received, applications have been paused for the time being. Our offices will keep you updated with the developments herein.
5. GIVING FOR HOPE
5.1. Al Baraka Bank in collaboration with the Willowton Group and other South African businesses have initiated the Giving for Hope Foundation in order to help SMME’s by providing interest, profit and admin free loans for a period of 2 years. The funding received from the Foundation can be used for job preservation by paying employee salaries.
5.2. The funding herein is open to all members of all sectors, races, gender, and religious groups that are socially responsible and Shariah Compliant SMME’s with an annual turnover of less than R 20 million per year. The applicant business must have a minimum number of 5 employees when applying to the fund.
5.3. The loan made is limited to R1 million rand per applicant.
5.4. Given that the main goal of the Giving for Hope Foundation is to ensure job preservation and ultimately job creation within our economy, loan applicants will need to prove employment.
5.5. Successful loan applicants will be required to open an account with Al Baraka Bank, free of any charges except cash deposit fees.
5.6. The loan repayments will start after the first year and is payable in 12 monthly instalments. What is very important to note that the lending is fully Shariah-compliant and meets FICA regulations.
5.7. The application process has, as to date, not opened yet. Our offices will keep you updated with the developments herein.
6. YOUTH MICRO ENTERPRISE RELIEF FUND
6.1. This is a fund established by the National Youth Development Agency that is geared at providing relief to youth owned businesses affected by the COVID-19 pandemic and that meet the NYDA’s criteria. The Fund will cover the operational expenses of the applicant. Applications to the fund can be downloaded on the NYDA Website and once completed, same can be emailed to the relevant provincial office of the NYDA.
6.2. The funding is limited to a once off maximum amount of R10 000.00 per applicant. The fund is accepting applications up until the 30th of May 2020.
6.3. In order to qualify, the applicant must:
6.3.1. be a South African citizen.
6.3.2. be 18 to 35 years of age.
6.3.3. the owners of the applicant business are South African citizens that reside in South Africa; and
6.3.4. the applicant business operates within the borders of South Africa.
7. YOUTH BUSINESS RELIEF
7.1. A fund introduced by the YCCISA to assist young individuals in businesses that are affected by the Covid-19 pandemic. The fund shall assist young entrepreneurs with operational costs, paying labour costs and rental, to name a few.
7.2. The Fund will assist young entrepreneurs with their operational costs, paying labour costs, rental and etc.
7.3. For applications to be considered by the Youth Business Fund, the applicant must:
7.4. Be a South African citizen.
7.5. Be 18 to 35 years of age.
7.6. Have an already existing business
7.7. All youth businesses are encouraged to apply but mostly informal traders, whom are not included in other rescuing funding methods put on place by government during this time.
7.8. Applications can be done online on the website or alternatively, manually by means of email to email@example.com
The options / resources highlighted above in the contents of this document are the most notable resources available to South African business owners.
It is our advice that business owners give consideration to the above and contact our offices for assistance with applications, questions and queries herein.
DU PLESSIS VAN DER WESTHUIZEN INCORPORATED
per: Palesa Motau
tel: 014 523 4600