We hope you are all doing well, getting used to this new normal. For some of us, we have already been in isolation for a while and a weekend spent at home entirely with family is becoming familiar. For others, it is new. There are some positives – notice how quiet the crime groups are now! Communication with family near and far seems to have increased dramatically. We have had time to enjoy our stunning garden, which I so often feel I take for granted. In fact, as I write this I am on our patio enjoying the sounds of birds and nature.
Government have announced the Debt Relief and Resilience facility guidelines. Please find below a write up from my fellow director Clive Stewart. Clive makes important points under the Business Resilience discussion about the number of businesses that are in this and that there will be processes which will take time. I reiterate the key point made by Clive: If your business is experiencing cash flow difficulties it is advisable to start making arrangements for workable payment plans now. Sincere thanks to Clive for putting this together over the weekend.
You will note that I have removed the confidentiality notices from this email. If you feel it would be helpful to someone in your network you are welcome to share. If, on the other hand, you would like to stop receiving these emails, please simply reply to the mail with the word “STOP” and we will remove you from the list.
Have a great day!
COVID-19: Debt Relief Finance Scheme and Business Growth/Resilience Facility Guidelines
By Clive Stewart CA(SA)
As many of you are no doubt aware, last week, the Minister for Small Business Development, Ms Khumbudzo Ntshavheni, announced details of intervention measures to support small, medium and micro enterprises (“SMMEs”) affected by the COVID-19 pandemic, two of these being:
· The Debt Relief Finance Scheme; and
· The Business Growth/Resilience Facility.
Debt Relief Finance Scheme
The Debt Relief Finance Scheme will offer qualifying SMMEs much-needed repayment relief, which will assist many business owners who are currently finding their debts unserviceable. This facility will also assist entities in acquiring raw material, and in paying labour and other operational costs. All these interventions will be structured to match the patterns of the SMME’s cash flows, as well as the extent of the impact suffered. The relief will be for a period of 6 months, from 01 April 2020. In instances where SMMEs will require assistance for longer than 6 months, the term may be extended dependent on their needs. Note that the scheme is not available to assist small businesses that were already in financial stress for different reasons prior to the outbreak of the pandemic in the country.
The key steps are:
1. Register your business on the SMME database: https://smmesa.gov.za
2. Complete online Application Form (to be released on Thursday, 02 April 2020);
3. Upload Required Supporting Documents
The detailed guidelines are available from: https://www.gov.za/sites/default/files/gcis_documents/Guidelines%20for%20Debt%20Relief%20Application.pdf
Business Growth/Resilience Facility
The Business Growth/Resilience Facility is specifically created to enable continued participation of SMMEs in supply value-chains, in particular those that manufacture (locally) or supply various products that are in demand as a result of current shortages 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, and the amount required will be based on the funding needs of the business.
The key steps are identical to those for the Debt Relief Scheme above.
The detailed guidelines are available from:
It is important to note that only SMMEs that are registered on the SMME database will be considered for either of the above 2 interventions. Please go to >>>to register your business.
However, please consider the following factors in respect of the above government support measures:
· There are over 200,000 businesses registered in South Africa, 98% of which have less than 50 employees (and are therefore SMMEs). If a sizable portion of these businesses experience financial difficulty as a result of COVID-19, there is very little chance that the government will be able to assist many of them, particularly during the 21 day lockdown period. My suggestion is therefore to be proactive and, if you are experiencing cash flow difficulties, to contact your banks, suppliers and other creditors sooner rather than later, and to communicate your inability to meet payment commitments over this time. It is in the best interests of the business and the credit provider to find a workable repayment plan to address any outstanding debt.
· The SMME database will be used by the government to track businesses going forward once we are over this pandemic. This is not necessarily a good or a bad thing, but just something to consider.
Finally, there are two other interventions that have been initiated, but there is currently a lack of clarity as to how they will operate, these being:
· The Solidarity Fund (https://www.solidarityfund.co.za/); and
· The R2 billion donated by the Rupert and Oppenheimer families to assist SMMEs and their employees that have been adversely affected by COVID-19.
As soon as further information exists as to how SMMEs can benefit from, and gain access to, the above funds, we will communicate this to you.