Many small businesses are still struggling to get loans from banks to help them weather the storm brought on by the Covid-19 pandemic and the resulting lockdown. The Banking Association South Africa recently briefed Parliament’s Portfolio Committee on Tourism on the support the banking sector was giving SMMEs.
Khulekani Mathe, who heads up Basa’s financial inclusion division, told the committee that the Covid-19 Loan Guarantee Scheme had not met expectations. He revealed that the largest share of loans went to companies with a turnover of between R1-million and just under R20-million.
“What was disappointing was that the companies with a turnover of less than R1-million had a very small share of the loans, which indicated that a more diversified set of funding sources was needed in South Africa for those companies because some of them were not able to meet the criteria,” Mathe said.
He said the reason, why SMMEs could not access loans, was because they did not have the relevant documents required by financial institutions. Also, not many small businesses were aware of the available funding opportunities, while others thought they did not qualify, Mathe said.
“Although the numbers were not as high as had been expected, the scheme had reached small businesses as was intended,” he said. Mathe said the banking sector was scaling up efforts to support SMMEs. The South Africa Future Trust, which included Absa, FNB, Investec, Mercantile, Nedbank and Standard Bank, had approved R18.35-billion in loans for more than 14,000 SMMEs as of 8 May.
“Basa also collaborated with the South African Insurance Association to teach consumers on the radio about what long-term, short-term and credit life insurance for SMMEs entailed, as well as risk management for SMMEs,” he said.
FNB’s SME Customer Segment head Jesse Weinberg told the committee that banks had performed well in the last few years in assisting SMMEs. This included helping with business development, developmental hubs, and enterprise and supplier development programmes.
He said FNB had launched a free electronic education app called Fundaba on its website, where businesses could access educational material in five different languages. “It is absolutely our top priority to not just be part of, but to try and fast-track the imperatives of the nation, of SMMEs, and all of the things that needed to happen to make the country a better place,” Weinberg said.
Other banks have also provided services to SMMEs to stay afloat during the pandemic.
They include Standard Bank, which has a Coronavirus Payment Interruption Scheme on loans for small businesses with a turnover of less than R20-million per year. It also has a three-month instalment relief plan for all personal loans for business owners with a turnover of less than R20-million per annum.