The compliance that SMEs were compelled to adhere to in order to receive relief funding during the pandemic was too restrictive, according to Ben Bierman, who is the managing director of a financial firm, Business Partners Limited. This resulted in SMEs not getting the help they needed, Bierman told a recent webinar hosted by the Small Business Institute (SBI). The purpose of the webinar was to reflect on the support that SMEs received during the Covid-19 pandemic.
Business Partners Limited was tasked with managing the Sukuma Relief Programme, which was initiated by business mogul Johann Rupert. In the first 100 days, R300 million was disbursed, and a total of 3917 SMEs received assistance, saving 32,500 jobs in the process. But despite these positive outcomes, Bierman said some hard lessons were learned. One of these was that SMEs simply did not have enough information about relief funds.
“We made assumptions around SMEs’ ability to access information about these funding opportunities in a complete lockdown environment, and in hindsight, we found out that SMEs did not have readily-available infrastructure and connectivity to access (information about) the relief efforts,” he said. “It is tragic, and to expect that all SMEs would be in a position to access these efforts through technology and infrastructure (such as internet connection) was not a safe assumption.”
Bierman pointed out that there had to be different ways of reaching SMEs, as the broad assumption that every one of them had access to the internet, was inaccurate. He also said that the compliance burden placed on SMEs in order to receive relief funding was too much. The criteria included proof of a viable and profitable business prior to the pandemic in the form of audited financial statements from February 2019 and management accounts from February 2020, tax compliance, payroll taxes, three months’ bank statements, rent statements, and credit agreements.
“We designed into our criteria a lot of compliance information, and in hindsight, we think that was too much to insist on tax compliance certificates, and (such requirements disqualified) a lot of well-run SMEs. And if we had to face another crisis we would not require as much compliance information as we did previously,” he admitted. Another blunder Bierman pointed to, was the negligence shown towards the informal sector.
He identified the informal sector as an emerging market that was critical for the formation of many SMEs, and he considered it disastrous that very little was done for the informal sector. “It is a national priority to see to what extent we can improve our understanding, and support, for the informal economy, and to ensure that businesses in the informal sector flying under the radar are supported,” Bierman said.