COVID-19 Small Business Relief Packages Updates + Reasons Applications Are Rejected
According to the #CombatCovid SMME Survey findings, three out of four small business owners, across industries, indicated that their business will not survive prolonged lockdown restrictions beyond 1 July 2020.
Business relief packages to help businesses in distress were launched by both the government and financial institutions following Covid-19.
The #CombatCovid SMME Survey survey reveals that 68% of relief applications have been unsuccessful.
According to the survey, many small businesses appear to be either passive or untrusting of the Covid-19 relief options available to them – less than half of the business owners surveyed have applied for relief from government, banks or other financial institutions. Of those that have applied, 68% were unsuccessful in their applications.
Some of the relief options that have been successful at supporting these SMMEs include the South Africa Future Trust, Debt Relief Fund and SMME Relief Finance Facility.
The various Covid-19 relief funds that the government has established to provide support for small businesses have provided direct assistance to over 27,000 enterprises.
Here is an update of Covid-19 relief funds for small businesses:
Government relief for small businesses
Small, Medium and Macro Enterprises (SMMEs) Debt Relief Financing Scheme
About the fund: The scheme opened for applications in April, was initially allocated an amount of R200 million and later increased to R500 million, because the department changed its approach to the Business Growth and Resilience Facility. The aim of the fund is to assist SMMEs with working capital as economic activities have been negatively affected by COVID-19.
Update: 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, according to the SA Government News Agency.
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.
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 businesses – that if supported to get back to work, they will be able to meet their own financial obligations.
The SMME Debt Relief Financing Scheme will on Saturday close the applications for Window -1 of the scheme.
The department will publish the names of the SMMEs funded during Window-1 on all its websites as of 29 May 2020.
For more info: Visit any of these websites: www.dsbd.gov.za; www.sefa.org.za; www.seda.org.za; www.mybindu.org.za. You can also call the department of small business development on 0861 843 384 or email: firstname.lastname@example.org.
COVID-19 Temporary Employer/Employee Relief Scheme
About the fund: South African employees can receive financial support from the Temporary Employee/Employer Relief Scheme (TERS) during the pandemic.
Update: On 18 May 2020, the Unemployment Insurance Fund (UIF), an entity of the Department of Employment and Labour, announced it has processed and paid COVID-19 TERS relief payments to the tune of R748 815 094.20 benefitting 149 263 workers represented by 9 362 employers.
This means that during the lockdown a total number of 2 551 236 workers have been given relief, which may be in lieu of or a top up to their salaries. The total amount disbursed since April 16, 2020 has now topped R14-billion (R14 079 099 409.20).
According to the UIF Commissioner, Teboho Maruping, with all the necessary information and documents furnished, the fund is now paying at 24 hours after the claim is made at best or 48-hours at worst.
The Department of Employment and Labour Minister, Thulas Nxesi told ENCA that they have now started paying workers directly to their bank accounts not through employers only.
“What this means is that workers do not have to wait until employers transfer their benefits to their accounts. While the claim is submitted by the employer who would have all the information that is pertinent to make the payments, the actual payment goes straight to the account of the worker thus eliminating further waiting period.”
For more info: log on to the website to get further information on benefits www.uifecc.labour.gov.za/covid19 or reach the UIF on the toll-free number 0800 030 007.
Covid-19 Agricultural Disaster Fund
About the fund: The fund intervention of R1,2 billion aims to address the effects of the Coronavirus and ensure sustainable food production post the pandemic.
Update: Minister of Agriculture, Land Reform and Rural Development, Ms Thoko Didiza announced on 17 May 2020 that smallholder and communal farmers’ application process opened on 8 April and closed on 22 April 2020 and 33 000 manual application forms were distributed through their provincial and district offices, commodity and civil society organisations.
The Minister said that after the closing date, 55 155 applications were received. The Eastern Cape Province received the highest number of applications followed by the Northern Cape and North West.
To date, 15036 applications have been approved valued just over R500 million in favour of smallholder and communal farmers. “Of the 15036 approved applications, 5 494 are women, 2 493 youth and 224 people living with disability and males at 9542. Livestock has been the most requested commodity by farmers, followed by vegetables, poultry and fruits.
“Each of the approved farmers will receive inputs in line with the size of their farming operations up to a maximum of R50 000,” said Minister Didiza.
She said the department will finalise its decision on the remaining applications in the next week.
The Minister added that a further R400 million is being channelled to farmers within the Proactive Land Acquisition Strategy (PLAS) who were already approved for the department’s Stimulus Package as they had initially been budgeted for in the 2019/2020 financial year.
“It must be noted that an amount of R600 million had to be reprioritised from the Stimulus Package on PLAS farms in the 2019/2020 budget to assist the other smallholder and communal farmers in terms of this Covid-19 intervention.”
Reasons applications are denied
The department has noted the lack of proper documentation or filing of documents by farmers.
“It saddens me that during this process many of them fell by the sideway because they could not provide proof that they are farmers or farming. The registration of farmers on the Producer Farmer Register will enable government to locate farmers so that targeted support can be provided,” commented the Minister.
For more info: Visit the website www.drdlr.gov.za/sites/Internet
Department of Small Business Development – Spaza Shops and General Dealers Support Scheme
About the fund: The department of small business development announced its partnership with Nedbank in the Spaza Shops and General Dealers Support Scheme. Nedbank made their Nedbank desks available which is found in all the BOXER stores countrywide to serve as additional service points. More information about the guidelines here
Update: According to Dayalan Govender, Managing Executive of Nedbank’s Card, Payments and Transactional Business, Nedbank has processed more than 1000 applications through select branches and Boxer stores with Nedbank desks.
“This has resulted in just over 400 spaza shops receiving assistance (as they are approved by the Department).”
Govender says the entire process, from application and vetting by the Department, and readiness of cards for collection could take a minimum of five days. “Once the card is ready for collection, the shop owner is immediately able to purchase at participating wholesalers and retailers.”
Reasons applications are denied
Govender added that it is worth noting that the main challenge is the fact that applicants don’t always bring the necessary supporting documentation required to qualify for the grants. “We are working with the Department on ways to continuously communicate with potential beneficiaries in ensuring that correct documents are provided when applying.”
Owners will need to bring the following documents to ensure their applications can be processed:
– A valid South African ID document
– A valid and original municipal trading license/ permit to trade or business license in case of a general dealer (copies are nor acceptable). Only permits or licenses issued by the municipality, not a councillor are valid.
Govender said there is no deadline has been set for applications.
For more info: Spaza shop and general dealer owners may call 0860 663 7867 or e-mail Spazasupport@dsbd.gov.za. Additional information may be obtained at the following websites: www.dsbd.gov.za; www.sefa.org.za; www.seda.org.za; www.mybindu.org.za
Department of Sports, Arts and Culture (DSAC) – DSAC’s COVID-19 Relief Fund
About the fund: The department announced in March 2020 a R150-million Relief Fund to assist artists, athletes, technical personnel and the core ecosystem of the sector. The other part of this fund was open to proposals for live-streaming the work of creatives and athletes, particularly, intergenerational cooperation between younger artists and the legends.
The deadline for application of the Relief Fund was the 6th of April. The department appointed independent adjudication committees.
Minister Nathi Mthethwa said in a media briefing on 4 May 2020, for the Sport Adjudication process:
– More than 300 applications were received by 23 April 2020. By 24 April, 93 successful applicants received their relief funds.
– After re-submission of applications were referred back to the federations, a total (aggregate) of 473 applications were received from 25 sporting federations.
For the Arts and Culture process: More than 6000 applications were received, of which approximately 5000 were COVID-19 Relief Fund applications (the rest of the applications had nothing to do with the relief fund).
– The total number adjudicated upon is 1050.
– An amount of 232 were recommended; a total of 603 were not recommended.
– 203 were referred to DSAC; 12 is the number of digital applications to be moved to the NFVF.
Reasons applications are denied
- DSAC application document missing, or attached but not filled in.
- No cancellation or contract documents.
- No proof of event.
- Postponement of events, and not cancellation (as per judging criteria – this should be changed in the next tranche of applications).
Department of Tourism – Tourism Relief Fund
About the fund: The Tourism Relief Fund is an additional R200 million fund available to help SMEs in the tourism and hospitality sector who are under particular stress due to the new travel restrictions.
The fund will benefit SMEs in all the nine provinces and various tourism sub sectors, such as accommodation, hospitality and related services, and travel and related services.
Update: Hlengiwe Nhlabathi-Mokota, spokesperson of the department of tourism, says they have received over 10,000 applicants – the rest are duplicates.
Nhlabathi says that due to court proceedings – the government was taken to court over its criterion that beneficiaries be BBBEE compliant – the department has kept the processing of applications on hold – businesses could still apply though.
In a Eyewitness News report, published 9 May 2020, Nhlabathi-Mokota said that incomplete relief fund applications had also slowed down the process. “After all the court processes, we are happy to say that there has been movement; 6,000 of them (applications) have been assessed and we’ve paid out just over R1 million to all those.”
For more info: SMMEs can submit funding applications by completing a form accessible online here. You can also visit the website. Contact the Call Centre from 08:00 – 22:00 on 0860 868 747 or email: email@example.com.
National Youth Development Fund (NYDA) – Youth Micro Enterprise Relief Fund
About the fund: The Youth Micro Enterprises Relief Fund (YMERF) is aimed at assisting youth enterprises who might not qualify for other funds. This fund will respond to challenges facing youth owned businesses such as inability to pay employees, lack of income, including waiting periods for other funding mechanisms. Funding will be capped at R 10 000 for every qualifying business.
The deadline for applications of the fund is end of May 2020.
For more info: Visit the website www.nyda.gov.za and, also, information is shared on NYDA’s social media platforms. You can also call 087 158 6345/ 5738 or email: firstname.lastname@example.org.
Private sector interventions
Rupert Family’s R1bn Sukuma Relief Programme
About the fund: Business Partner‘s Sukuma Relief Programme aims to disburse R1-billion from the Rupert Family to small businesses. The financier, in which SA entrepreneur and billionaire Johann Rupert has a share, has been appointed administrator of the fund.
The fund is made up of two separate relief offerings – one for formal sole proprietors and another for other business entities, namely close corporations, companies, and trusts.
Business Partner’s Sukuma Relief Programme consists of grants and low-interest-bearing loans with a 12-month repayment holiday.
Business Partners managing director Ben Bierman said qualifying formal sole proprietors will receive a non-repayable grant of R25 000. Close corporations, companies and trusts will be eligible for an unsecured loan ranging between R250 000 and R1-million, with no repayment obligations or interest incurred for the first 12 months, in addition to a R25 000 grant, said Bierman.
Update: Business Partners did confirm that the Sukuma Relief Programme has made significant progress in reviewing the over 10 000 applications received as of 6 April when they temporarily closed for applications.
Business Partners have used the time review applications received, approve some applications and decline others. They said that they have made a considerable number of pay-outs and will share additional information soon.
Reasons applications are denied
Formal Sole Proprietors
- The business owner applying is not a formal sole proprietor. For example, a company registered as a Pty Ltd is not a sole proprietor even if there is only one director or employee.
- The formal sole proprietor is not registered with the relevant authorities in terms of a business license and tax registered, where applicable.
- The formal sole proprietor applying for financial aid cannot prove that the business was active prior to COVID-19 e.g. the three months bank statement submitted reflects little or no business activity. As you may be aware, the Sukuma Relief Programme was initiated to provide financial assistance and aid to small and medium enterprises negatively impacted by COVID-19).
Close corporations, companies and trusts
- The business is not tax compliant.
- The business applying for financial assistance cannot provide evidence that the business was viable prior to COVID-19 e.g. Management accounts for the period 01 March 2019 until at least 31 December 2019 and motivation.
- The business was insolvent or making losses prior to COVID-19.As you may be aware, the Sukuma Relief Programme was initiated to provide financial assistance and aid to small and medium enterprises negatively impacted by COVID-19).
- The amount applied for is outside of the range for the Sukuma Relief Programme funding range of R250 000 to R1 million.
The South African Future Trust (SAFT)
About the fund: The South African Future Trust (SAFT) fund was established by the Oppenheimer family to provide financial support to the employees of qualifying SMEs. First National Bank (FNB) has been assisting SAFT as an agent to help deploy these funds.
Update: According to a press release:
- FNB received more than 12,000 qualifying SAFT applications from businesses who have been financially impacted by the COVID-19 pandemic.
- In addition to SAFT applications, FNB has received more than 40 000 completed assessments for both financial and non-financial support from its business clients. The assistance requested ranges from payment relief on existing loans, to merchant services device fee relief, as well as resources and guidance on navigating the COVID-19 crisis.
- Approximately 2 300 businesses have been signed up for the funding scheme via FNB.
- These funds will enable 17 367 employees to receive income for the next three months.
Jesse Weinberg, head of the SME Customer Segment at FNB says due to the overwhelming number of applications they have received for SAFT funding we are unable to process any further requests at this point.
“Applications are approved for qualifying businesses on a first come, first served basis, the portion of the SAFT fund made available through FNB is currently fully subscribed… As with all relief funds, they are limited and unfortunately, we have many clients that did not obtain funds from this scheme.”
Payment Relief for SMEs updates
FNB and Wesbank
According to a press release, First National Bank (FNB) and WesBank have approved payment breaks on more than 500,000 credit agreements for nearly 150 000 individual and business customers since 1 April 2020.
The relief includes payment breaks and/or credit insurance assistance in excess of R4.3 billion to help customers whose finances have been affected by COVID-19.
While FNB’s payment breaks are provided to individual customers across the bank’s full credit product range, the bank has revealed that nearly 127000 individual customers have been offered contracts on overdraft and credit card facilities, with contracts for relief on personal loan repayments at 83000 and home loans in excess of 33000.
Chief Executive of WesBank, Chris De Kock, says: “We have received a significant uptake from our customers on our COVID-19 payment relief options to dull the impact of the crisis. We have provided relief to customers impacting installments to the value of R951 million. Qualifying customers have either been granted moratorium and a contract extension or if they bank with FNB, a payment break through the bank’s COVID-19 application process, both options are available to a maximum period of three months.”
More information here
WesBank customers can apply online at www.wesbank.co.za and will be assisted within the respective guidelines stipulated by key industry stakeholders like BASA and SARB.
FNB’s customers are encouraged to use digital channels to access most services, including assistance with COVID-19 relief.
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