SME Loans and Level 4 Lockdown Regulations
On the 21st of April – president announced that there will be additional funding available to SME’s effected by the COVID-19 pandemic. And on the 23rd he also announced that there will be a phasing out process of the lockdown starting on the 1st of May 2020.
The details to the above are outlined below, the banks have started explaining how the SME support program will operate and below is all the details about what businesses can reopen and the process to reopen.
Herewith a brief summary and some helpful links.
1. SME LOAN SCHEME
The SME loan scheme, announced by the President on 21 April 2020, is an initiative by government, in partnership with banks, to support the SME sector impacted by Covid-19. The scheme offers five-year-term loans at the prime lending rate to cover the next three months of business operating expenses. All banks are working with National Treasury, the SARB and other participating banks to finalise the details of the scheme.
DETAILS OF LOAN OFFERING (preliminary – subject to change)
The following loan constructs are offered to qualifying SMEs:
• Term loan (66 months/5,5 years).
• Priced at prime interest rate.
• No payments due for the first six months (but interest accrues).
• After six months the loan is to be repaid through equal monthly instalments over five years.
• Loans can be repaid earlier in full without penalties.
The loan amount is determined by the operating expenses of the business:
• The loan covers up to three months’ full operating expenses.
• There is no upper limit, but the amount is driven by business needs and affordability.
• Operating expenses include salary and wages; rental and lease cost; utilities; supply chain; and other operating expenses. eg security).
Loan terms and conditions include the following:
• Businesses will be prohibited from paying dividends or repaying shareholder loans until the Covid-19 SME loan has been repaid in full.
QUALIFYING CRITERIA (preliminary – subject to change)
Applicants must meet all the following criteria to be considered for this loan:
• Operating entities – all business types, but specifically excluding individuals, state-owned entities, listed companies and companies with capital market funders or funding instruments.
• Turnover <R300 million per year.
• Registered with SARS. In good standing as at 29 February 2020 (ie up to date on all credit agreements, good credit history).
• Ability to demonstrate direct impact by Covid-19.
Any qualifying business can only apply to their main/primary bank. To apply please prepare the following:
1. Completed, signed loan application form (not yet available).
2. All documentation listed on the document checklist (not yet available) – We expect financial statements and management accounts would be the main requirement.
3. Completed, signed resolution to demonstrate mandate (template not yet available).
2. IMPORTANT DOCUMENTS RELATED TO COVID19
Last night, members of the National Coronavirus Command Council, led by Cooperative Governance and Traditional Affairs Minister Nkosazana Dlamini-Zuma, gave a detailed briefing on the regulations relating to the Covid-19 Level 4 restrictions.
Lockdown Regulations is expected to move down to Level 4 effective the 1st of May 2020. A complete PDF version of Gazette 432548 (“GG”) which details these regulations can be viewed here – https://bit.ly/2VOwUI4
Links to important permits mentioned in the GG:
· https://bit.ly/3cUGZsw – Permit for the Movement of Children to Travel to Another Province/metropolitan Area/district
·https://bit.ly/2y2DC4l – Order for a Person to Go to a Site of Isolation, Quarantine Facility, or for a Person to Go for Medical Examination
·https://bit.ly/2ycom4D – Permit to perform an essential or permitted service
·https://bit.ly/2W924Jb – Permit to Travel to Another Province/metropolitan Area/district for a Funeral
·https://bit.ly/3aLrOk1 – Sworn Affidavit by Person Who Wishes to Attend a Funeral in Another Province/metropolitan Area/district
Article with thanks to http://galbraithrushby.co.za/