COVID-19: Private Sector Relief Initiatives

By Clive Stewart CA(SA)

The Rupert and Oppenheimer families have each made R1 billion available to assist small, medium and micro enterprises (SMMEs) that have been impacted as a result of the COVID-19 pandemic. Contrary to popular belief, these funds were not donated to The Solidarity Fund, but will each have their own objectives and be independently administered. More information on each is provided below.

Oppenheimer R1 billion

The monies donated by the Oppenheimer family will be made available to employees of SMMEs as interest-free loans through the newly created South African Future Trust (SAFT). Points to note in respect of this initiative include:

• The trust will be administered by South Africa’s “Big 4” banks (ABSA, FNB, Nedbank and Standard Bank) at no cost to the trust.
• Qualifying SMME employers (see below) will be able to apply for the scheme via their preferred partner bank, providing a list of “at risk” employees who are facing financial hardship due to Covid-19.  The SMME must be an existing client of the partner bank in order to apply.
• The employers will need to submit further documentation on behalf of their employees as required.
• Distributions will be made directly from the Big 4 Banks to the specified employees and will be in the form of interest-free loans for a five-year period. It is expected that the typical loan amount per employee will be around R750 per week, for a period of 15 weeks.
• Employees will not be liable to repay the loans, but the businesses for whom they work will be. If businesses are unable to repay the loans, SAFT will work closely with SMMEs to ensure that repayment plans are in place which are sustainable for the business concerned.
• SAFT loans will be subordinated to other pre-existing debts.
• The Oppenheimer family and businesses won’t receive any money back from the SAFT, which will operate as a public benefit organisation. Nicky Oppenheimer, and his son Jonathan, stated that “Once the need for a short-term financing facility has passed, funds will be used to support initiatives with a focus on employment creation in South Africa until all funds are ultimately disbursed.”
• Businesses will be able to apply directly with their banks from Friday, 03 April 2020.

In order to qualify for the employee loan fund, an SMME must fulfil the following criteria:

• Annual turnover below R25 million;
• Must have been trading for at least 24 months;
• It must have been a sustainable business on 29 February 2020; and
• It must have been adversely affected by COVID-19.

For more information, please visit South African Future Trust (SAFT).

Rupert R1 billion

The monies donated by the Rupert family will be made available to SMMEs through the newly created Sukuma Relief Fund. At the time of writing this fund has been oversubscribed and applications are presently suspended.  Please watch the fund’s web site for future developments.

Points to note in respect of this initiative include:

The fund will be administered by Business Partners.

• Formal sole proprietors can apply for R25,000 in cash as a once-off grant that does not have to be repaid.
• Companies, close corporations and trusts can also apply for the R25,000 non-repayable cash grant, as well as a low-interest loan of between R250,000 and R1 million.
• The loan will be interest-free for the first 12 months with no repayment obligations during this period. Thereafter it becomes repayable and will bear interest at the prime interest rate.
• No security is required to be provided for the loan.
• Businesses must be tax and regulatory compliant.
• Businesses must be able to prove that they are in financial distress as a result of COVID-19.
• The application process is only available online via the Sukuma Relief Fund.