South Africa: R513 Million Relief Fund for SMMEs

The Small Enterprise Finance Agency (Sefa) has approved payment worth R513 million for small businesses whose finances have been negatively affected by the COVID-19 pandemic.

"Since the opening of Small, Medium and Macro Enterprises (SMMEs) Debt Relief Financing Scheme, Sefa has received 35 865 applications of which 14 451 were fully completed whereas 21 414 were incomplete and they were referred to Small Enterprise Development Agency (Seda) for assistance with the applications," the Department of Small Business Development said on Friday.

Of the 14 451 complete applications, Sefa has approved 1 497 applications worth R513 million.

This Scheme, which opened for applications in April, was initially allocated an amount of R200 million and later increased to R500 million, when the department changed its approach to the Business Growth and Resilience Facility.

The aim of the Scheme is to assist SMMEs with working capital as economic activities have been negatively affected by COVID-19.

The elements of working capital covered through the Scheme were:

Payroll assistance - assists employers whose employees do not qualify for UIF Relief, on condition that those employers register their employees with UIF;

Rental assistance (facility or equipment) - assists businesses to pay their rental obligations for either working tools or facilities/ business premises. In case, facilities rentals - there is potential for landlords to double dip from banks rescheduling of mortgage repayments whilst collecting rent from their tenants; and

Utilities - to assist with municipal bills.

According to Sefa's assessment, the balance of the 12 954 complete applications require an estimated budget of R4.4 billion but a bulk of the applications require assistance with payment of salaries to the total value of R3.6 billion.

"In this regard, the department has entered into agreement with the Unemployment Insurance Fund (UIF) to ensure that SMMEs that previously did not qualify due to non-compliance can be covered by the UIF, provided they agree to an acknowledgement of debt as well as payment terms with the UIF.

"Furthermore, this agreement ensures that SMMEs that had already applied for payroll assistance through the SMME Debt Relief Finance Scheme do not need to re-apply with the UIF but their applications will be forwarded directly to the UIF," the department said.

The assessment has also indicated that applications for a total value of R800 million are from business - that if supported to get back to work, they will be able to meet their own financial obligations.

The department will commence direct engagements with these SMMEs to ensure they receive the support that they need and will continue to engage with National Treasury on the funding gap.

The SMME Debt Relief Financing Scheme will on Saturday close the applications for Window -1 of the SMME Debt Relief Financing Scheme.

The department will publish the names of the SMMEs funded during Window-1 on all its websites as of 29 May 2020.

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