Prime less 5% for honest small businesses – and plus 10% for chancers: Covid-19 help details
- Funds and initiatives are springing up to help small businesses – and other companies – in South Africa during the economic crisis caused by the novel coronavirus outbreak and measures to contain it.
- Banks are offering debt relief, a private solidarity fund is asking for donations (some of which may be applied to help businesses), and tax measures are already in place.
- Here is what we know about assistance to small businesses and other companies in SA.
- (This article is constantly updated; check back for new information as we get it.)
- For more stories go to www.BusinessInsider.co.za.
(Last updated: 11:58, 24 March 2020)
South Africa has a number of funds and initiatives in place to help businesses and companies – especially small businesses – during the economic crisis triggered by the novel coronavirus behind Covid-19, and the measures to contain it.
Banks have temporary debt relief plans and options, immediate tax breaks have been implemented, and systems now exist to register for help, advice, and opportunities.
Much, but not all, of the measures are aimed and small and medium-sized companies, especially those organisations involved in critical services and manufacturing from food to masks.
The initiatives and opportunities intended to help business are rapidly evolving, and details are not always immediately available.
Here is what we know about plans and options for South African business during the SARS-CoV-2 disaster.
Some small businesses will receive loans at prime less 5%, but chances will be held to punishing rates instead.
The small business department will make available a range of funds and mechanisms for small businesses, and in some cases also the likes of hawkers and the self-employed, its minister Khumbudzo Ntshavheni said.
For those who genuinely need help, the interest rate will be set at prime minus five percentage points, which currently means an interest rate of 3.75% per year.
But those who try to take advantage of the crisis will be punished with interest rates of prime plus 10 percentage points, Ntshavheni said. That means chancers caught out will pay 18.75% in interest.
Rumours that help will only be available to those companies that are more than half black owned are fake news, she said. However, priority will be given to companies that benefit women, young people, and people with disabilities.
Requirements for support from the various funds include:
- businesses must be 100% South African owned
- at least 70% of employees must be South Africans
- recipients must be tax compliant
Companies that are not tax compliant can be helped to do so, Ntshavheni, but will not receive support until their affairs have been regularised.
R200 million is available for small tourism companies, with a focus on black-owned ones.
R200 million has been set aside to support tourism businesses, tourism minister Mmamoloko Kubayi-Ngubane said, but only very small ones.
The funding will be made available to companies that:
- have an annual turnover over less than R2.5 million
- have been in business for at least one year
- were not in distress before the Covid-19 disaster
- are fully registered with the CIPC and tax compliant
Normal black-empowerment rules will be followed, Kubayi-Ngubane said, which means black-owned companies will receive preference.
Small businesses can now register for help, possibly including money, from the government.
A special website for the department of small business development, at www.smmesa.gov.za, is now open for registration.
Companies can specify the kind of assistance they require, in either financial support or non-financial support, but there was no immediate indication what might be on offer after the website launched.
The small business department earlier said it had plans for a "Business Growth/Resilience Facility".
It also said the registration database would also be used to alert micro, small, and medium-sized businesses about opportunities and market support measures to be implemented in future.
The Solidarity Response Fund is expected to spend some of its money on businesses, but details are not yet available.
The privately-managed Solidarity Response Fund started to solicit donations on 23 March, after President Cyril Ramaphosa announced government seed funding of R150 million.
Early indications were that most of its spending would be directed at measures to slow the spread of the coronavirus, and then towards individuals.
"The fund will focus efforts to combat the spread of the virus, help us to track the spread, care for those who are ill and support those whose lives are disrupted," Ramaphosa said.
But the fund is expected to spend its money via small businesses where possible, and it may also provide some form of assistance to businesses, if only through advice.
Businesses with a turnover of less than R50 million can get a free, four-month tax holiday
There will be a four-month holiday for some companies on some types of tax, President Cyril Ramaphosa announced on 23 March.
Businesses with an annual turnover of less than R50 million will be able to delay payment of one fifth, or 20%, of their pay-as-you-earn liabilities, he said.
A portion of provisional and corporate income tax will also be delayed.
The taxes not paid will not accrue interest or penalties for the next six months.
Details on the exact logistics of the tax holiday are expected from the SA Revenue Service, but were not yet available at the time of the last update to this article.
See also: These South Africans will get a windfall of R500 a month until July as part of Covid-19 measures
Banks are offering a variety of debt-payment delays and other plans, with more to come.
Banks have specifically been excluded from provisions of the Competition Commission, which forbid co-ordination among competitors, so they can come up with joint plans to help individuals and companies.
Standard Bank will give all small businesses and students a three-month debt repayment holiday.
Nedbank says it will offer all clients “individual solutions to cashflow challenges” due to the coronavirus.
This includes that they will be able to halt debt repayments (or part thereof) for a “suitable” period. Alternatively, their loan periods may be extended or they could get more credit to manage short term cashflow shortfalls.
This article is constantly updated throughout. Check back for new information as we receive it.
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Also from Business Insider South Africa:
- Here’s how you can make a donation to South Africa’s Covid-19 Solidarity Response Fund
- These South Africans will get a windfall of R500 a month until July as part of Covid-19 measures
- Small businesses in SA can now register for help during the coronavirus disaster
- You are legally required to report a neighbour with the coronavirus in South Africa