Even before Covid-19 hit the country’s shores, many SMMEs were struggling to access credit and relied solely on their revenue to sustain them. But the pandemic made it a lot more difficult, forcing small businesses to tap into almost non-existing savings reserves to stay afloat. This is according to “From Survival to Opportunity through COVID-19 and Beyond SMME Baseline Report” released by the SA Future Trust last week. It surveyed 9656 businesses that took out loans with the trust, which was established in March 2020 with an R1 billion contribution by the Oppenheimer family to help SMMEs.
Out of these businesses, 2849 responses were received. According to the report, the majority of SMMEs which applied for the loans, had less than a month of savings available, indicating the detrimental impact of the various lockdowns on the savings of small businesses. It also revealed that SMMEs had to source credit and other forms of finance from banks, formal lenders, family and friends, investors, grants, and small or microlenders.
“SMMEs reported that they struggled to access credit for their businesses even before the Covid-19 crisis,” the report reads. “The 2016 Global Entrepreneurship Monitor survey found that problems with finance led to 28% of businesses closing.” According to the document, the SA Future Trust lessened the financial burden on many SMMEs from the early days of the pandemic until now. “The SA Future Trust Fund made it easier for micro-businesses, in particular, to access credit,” the report reads.
“Across all sectors, the majority of businesses that took out a loan from the SA Future Trust supported fewer than 10 full-time employees.” Businesses had to have an annual turnover of less than R25-million per year to qualify for a SA Future Trust loan, but data collected indicated that most of the businesses taking up the loans were on the smaller side.
“Businesses with fewer than 10 employees and who likely had an annual turnover of between R5-million to R20-million made up 71.84% of the respondent beneficiaries,” the report reads. The SA Future Trust loans were accessed by SMMEs through five-year interest-free loans which were paid directly to the business’ employees at R750 per week for 15 weeks, which was a total of R11,259 per employee.
All repayments made to the trust would be used to support inclusive socio-economic growth and build the SMME sector. This project is expected to end in December 2049.