COVID-19 RELIEF FUNDING

In recent weeks, the South African Government has implemented various interim measures to curb the immediate and longer-term effects of the COVID-19 pandemic on businesses and individuals. Here at Funding Connection, we are dedicated to helping entrepreneurs access relief funding by providing our support to help you apply for specific funds, fill in and compile required forms, create business plans or business models according, and coach you through the whole process. We will also happily supply you with relief fund application forms that are free of charge. 

To get in contact with us for help to access Relief Funds CLICK HERE

Below are highlights of some interim relief measures currently being implemented by the SA Government and its departments, as well as other initiatives aimed to reduce the effects of COVID-19:

SMME'S

  • R 500 Million has been made available by the Department of Small Business Development

  • R 200 Million has been made available by the Department of Tourism

The Department of Small Business Development is finalising an "SME Support Intervention" comprised of a Debt Relief Fund and a Business Growth/Resilience Facility to mitigate the impact of the expected economic slowdown on SMMEs in South Africa. The Department has made over R500 million available to the Debt Relief Fund. Discussions are ongoing in relation to an increase in this fund.

  • The Debt Relief Fund will provide relief for existing debts and repayments. To be eligible for assistance under the Debt Relief Fund, the SMME must demonstrate a direct impact or potential impact of the COVID-19 pandemic on its business operations. The Debt Relief Fund will also assist SMMEs in acquiring raw material and paying labour and other operational costs.  

  • The Business Growth/Resilience Facility was created to enable continued participation by SMMEs in supply value-chains, particularly those that manufacture products locally or supply products currently in demand due to the COVID-19 pandemic, in line with the National Treasury Instruction Note No. 8 of 2019/2020. This facility will offer working capital, stock, bridging finance, order finance and equipment finance. The amount required will be based on the funding requirements of each relevant business.

Healthcare

  • R 12 Million has been made available by the Department of Science and Innovation to support research in response to the COVID-19 pandemic and will redirect a further R 30 million towards interventions to combat the pandemic.

  • R 500 Million has been made available by the IDC.

The Department of Science and Innovation has made R12 million available to support research in response to the COVID-19 pandemic and will redirect a further R30 million towards interventions to combat the pandemic.

Trade & Industry

  • R 700 million-plus R 3 billion in the next fiscal quarter - made available by the IDC.

The IDC and the Department of Trade, Industry and Competition have compiled a more than R 3 billion package for industrial funding to help vulnerable businesses and fast-track funding to businesses that are considered vital for addressing the impact of the COVID-19 pandemic. This funding is only available to South African-owned businesses.

A significant portion of the funding has been allocated as follows:

  • R 500 million for trade finance to import essential medical products; and

  • R 700 million for working capital, equipment and machinery.

The remaining portion of the funding will be allocated for:

  • ensuring food security by prioritising support to agriculture and food value chains;

  • providing working capital to the tourism sector;

  • bridging finance to support supply chain interruptions;

  • providing working capital to ensure energy security by supporting suppliers of primary energy; and

  • providing working capital and bridging finance to SMMEs that provide components to car-makers.

In addition, the IDC is providing a capital allocation of R 3 billion in the second quarter of 2020 to support businesses during the COVID-19 pandemic.

Agriculture & Food

  • R 1,2 Billion has been made available by the IDC

The Department of Agriculture, Land Reform and Rural Development set aside R 1.2 billion to address the effects of the COVID-19 pandemic and ensure sustainable food production. The Department has also made R 100 million available to the Land Bank to assist farmers in distress.

Black Entrepreneurs

  • R 200 Million has been made available by the NEF.

The NEF is making R 200 million in loans available for black entrepreneurs to manufacture and supply a range of medical products, including medical masks, sanitiser, dispensers and related healthcare products ("Priority Products and Services"), to support the healthcare sector during the COVID-19 pandemic.

 

The primary purposes of these loans must be to purchase machinery, equipment and raw materials or to fund other working capital requirements needed to manufacture and supply Priority Products and Services. Each Black-owned business can apply for R 500,000 to R 10 million of funding. The loans, offered at 0% interest for the first year and thereafter at 2.5% per year, will be repayable over a maximum term of 60 months. Each black entrepreneur must meet the requisite eligibility criteria to qualify for funding.

Labour & Employment

  • Assistance and relief via the UIF benefit scheme

Following discussions with the Minister of Employment and Labour, the UIF has developed a COVID-19 Temporary Employer-Employee Relief Scheme to assist employers unable to pay the full salaries of any workers sent home during the lockdown. The UIF will not handle claims from individuals during this time, but will instead engage with companies, sectoral associations and bargaining councils.

Retail

  • Exemptions and relief made available to qualifying retail tenants

The Minister of Trade, Industry and Competition has issued a block exemption for the Retail Property Sector. The Block Exemption exempts a category of agreements or practices between designated retail property tenants and landlords from the application of section 4 (Agreements between competitors) and section 5 (Agreements between suppliers, firms and customers) of the Competition Act at the request of and in coordination with the Department of Trade, Industry and Competition.

The Block Exemption applies only to agreements or practices related to:

  • payment holidays and/or rental discounts for tenants;

  • limitations on the eviction of tenants; and

  • suspensions or adjustments to lease agreement clauses that restrict retail tenants from undertaking reasonable measures required to protect their viability during the national disaster.

The Block Exemption extends to all of the following South African designated retail tenants, including small and independent retailers, unless otherwise authorised by the Minister or the Competition Commission:

  • clothing, footwear and home textile retailers;

  • personal care services (such as hairdressers, health and beauty salons); and

  • restaurants.

Solidarity Fund

  • Continuous contribution fund - Made available to assist South Africans affected by the outbreak.

The SA Government has set up an independent Solidarity Response Fund to alleviate suffering and distress caused by the COVID-19 pandemic and assist South Africans affected by the outbreak. The Fund is independently administered. South African businesses, organisations and individuals, as well as members of the international community can contribute to the Fund.

Giving for Hope Foundation

  • The Giving for Hope Foundation to assist local Small, Medium and Micro Enterprises (SMMEs) during these difficult times that lie ahead.

The Five-week general lock-down except for essential services and industries has seen multiple large enterprises seeking protection from bankruptcy. The biggest impact will be felt by SMMEs, many of these family-owned businesses and sole proprietorship's, form the largest employers in our economy. Unlike larger enterprises, that have easier access to capital, many SMMEs will struggle to stay afloat post COVID 19.

The Foundation launched with R 100 million and hopes to raise another R 400 million to the Giving for Hope Foundation to raise R 500 million. The Foundation will provide SMMEs interest, profit and admin-cost free loans for two years, with repayments commencing after the first year, in 12 monthly instalments.

Tourism Relief Funding

The Department of Tourism has made an additional R 200 million available to assist SMMEs in the tourism and hospitality sector who are under particular stress due to the new travel restrictions.

The department is committed to putting people and their well-being first, ahead of profits as part of a response to COVID-19. The fund will be administered to benefit SMMEs in all the 9 provinces and various tourism sub-sectors.

 

Necessarily and rightly there will be a degree of bias towards rural areas, townships, women, young people and people with disabilities.

Oppenheimer Fund

  • The Oppenheimer's R 1 billion fund for businesses is available – here’s how it works:

The South African Future Trust (SAFT) have pledged a billion rand to fight COVID-19 and help employers and employees in SMME’s. It will transfer funds to employees through interest free loans and plans to stimulate economic growth after the crisis.

Business owners can apply to access the fund via the country’s four main banks, the trust will disburse interest-free loans to employers over a five-year term.

To qualify, a small business must:

  • Have an annual turnover of less than R 25-million.

  • Have been be trading for two or more years.

  • Must be in good standing with its bank, statutory creditors and with the bureaus as at the end of February 2020

  • Be able to prove that revenue has been impacted by Covid-19 and therefore requires assistance to pay their permanent staff salaries.

SAFT loans will be:

  • Interest-free for a five-year period.

  • Subordinated to other per-existing debt.

  • If businesses are unable to repay the loan, SAFT will work closely with SMMEs to ensure that repayment plans are in place which are sustainable for the business concerned.

Eligibility criteria for SMEs:

  • Annual turnover below R 25 million

  • Must have been trading for at least 24 months

  • It must have been a sustainable business at 29 February 2020

  • It must have been adversely affected by the Covid-19 outbreak

  • Needed documentation

  • Company identification

  • Registration number (for CC's)

  • Master’s reference number (for trusts)

  • ID number and address (for sole proprietors)

  • PAYE number

  • Income tax number

  • Confirmation of employment status of employee

Business owners must lodge an application at their respective bank. Nedbank FNB, Standard Bank and Absa are already involved, more banks are approached to assist to get this support to companies in need.

Spaza Support Scheme

  •  Nedbank has partnered with the Department of Small Business Development to help spaza shops and general dealers to access support.

Enterprise Finance Agency’s (SEFA) Khula Credit Guarantee Scheme. The scheme allows qualifying spaza shops and general dealers to enjoy discounted prices when they purchase a basket of pre-approved goods from selected wholesalers, using the card. 

The card has been pre-funded up to an amount of R3 500. These bulk-buying deals have been negotiated by the Department of Small Business Development. 

Nedbank will assist owners with registering for the support scheme and completing the application form with the required supporting documents.  Owners will need to bring the following documents to ensure their applications can be processed:

  1.  A valid South African identity document

  2. A valid and original municipal trading licence/permit to trade, or business licence in case of a general dealer (copies are not acceptable). 

  3. Only permits or licences issued by the municipality, not a councillor, are valid.

“The support scheme also benefits the general dealers/traditional grocery stores in townships and villages with the applicable licences, which are 100% owned by South Africans,” said the department in a statement.

It further clarified that whereas local hardware stores are also beneficiaries under this scheme, their funding package is being finalised. This is to ensure their ability to operate, as their businesses have been included in the updated list of businesses offering essential services allowed to trade during the course of the nationwide Covid-19 lock-down.

Application process


There are several steps to be followed to when applying for support:
 

A spaza shop/general dealer owner, who is a South African and holds a valid trading permit (including temporary) or business licence, in the case of a general dealer qualifies to apply.


The qualifying spazas and general dealer owners must go to their nearest Nedbank branch or Nedbank desk at their nearest Boxer store for assistance to apply.