SMMEs that have suffered due to the Covid-19 pandemic, are set to get additional support with the commencement of the National Treasury’s Bounce Back Support Scheme, which was announced in February. The programme is targeted at SMMEs to facilitate their recovery and help them bounce back. It is also set to help businesses still reeling from July’s civil unrest in KwaZulu-Natal and Gauteng, as well as those ravaged by the recent flooding.
Treasury said that the scheme was made up of a loan guarantee mechanism of R15 billion and a smaller equity-linked scheme, and these would be facilitated by it and Development Finance Institutions (DFIs). The smaller equity-linked scheme would be introduced at a later stage as a complementary tool to the tune of R5 billion. “The Bounce Back Support Scheme loans will be accessible through participating banks (banks which have opted to use the scheme for their customers),” Treasury said.
Access for DFIs and non-bank SME finance providers to the Bounce Back Support Scheme will be facilitated through participating banks, and such participating banks will still have to perform due diligence per regulatory standards. “Access to the equity-linked tool is expected to be introduced later this year, and more details will be communicated once they are finalised.”
Businesses with a maximum turnover of R100-million per annum were eligible to access the scheme. Treasury said the maximum loan amount would be set at R10-million per business for SMMEs, and a minimum loan amount of R10,000. “Eligible businesses should contact their primary or main banker for further information on the scheme and the qualifying criteria,” it recommended.
The loans would be capped at a repo rate of 6.5%, and businesses have five years to repay the money. However, there were plans in place if an enterprise was unable to pay back the cash on time. “Loans can have rescheduling options at the discretion of the lenders (pay as you grow) for up to 10 years from the first drawdown in the event of businesses being unable to pay and repayment due,” Treasury said.
It said the scheme benefited from lessons learnt from the 2020 Loan Guarantee Scheme to provide for a greater take-up, including by DFIs and non-bank SME finance providers. In June 2020 the Covid-19 Loan Guarantee Scheme was established to help ease financial pressures experienced by qualifying businesses negatively affected by low economic activity following lockdown restrictions to reduce the spread of the virus.