Lockdown level 2 ushered in more relaxed regulations and resumed almost all economic activity. Small businesses are the backbone of the economy, and unlike, corporates, most small businesses did not have the necessary financial safety net when the pandemic unexpectedly brought business and society to a halt.

Resuming operations for most SME’s will not be an easy feat due to finances, lost month’s business, and essentially having to ‘start over’ – that is where small business rescue comes in. President Ramaphosa, in the initial economic relief strategy, went to great lengths to dedicate large sums of money small business rescue in South Africa during the COVID-19 pandemic.

Following up on our previous posts about small business relief funds available for SME’s in different industries, and how to apply for tax deferrals for your business we look into how to apply for a government-backed COVID-19 loan. Plus, the Sukuma Relief Fund that was established to help small businesses in the wake of the Coronavirus pandemic.  

COVID-19 Loan

The Reserve-bank administered, and government-backed COVID-19 loan fund amended and relaxed qualification criteria so that many more small business owners can get the necessary funding they need. Here’s what you need to know to apply for the COVID-19 small business relief loan:

  • You can apply at any of the following banks; Absa, Bidvest Bank, First National Bank, Grindrod Bank, Investec, Mercantile Bank, Nedbank, Sasfin and Standard Bank
  • Need to be in good standing with your bank from 31 December 2019: meaning that you are not behind on any loan payments up until that point 
  • Registered with SARS
  • In financial distress due to the COVID-19 lockdown 
  • Bank credit assessment will be less restrictive and more discretionary 
  • Sole proprietorships are now included 
  • The interest and repayment holiday has been extended
  • If you were previously rejected for the loan, your bank may reconsider your application

Here’s how you can improve your chances of getting the loan:

  • Be prepared with your paperwork
  • State the purpose of the loan clearly
  • Demonstrate your calculations that led you to the loan amount you seek
  • Insist on speaking to your relationship banker

The Sukuma Fund

Funded by the R1-billion donated by the Rupert Family and Remgro Limited, the Sukuma Fund is administered by Business Partners. They provide non-refundable R25 000 grants to sole proprietor businesses. Plus, soft loans, and grants up to R1-million to larger SME’s.

Here’s what you need to know:

  • The loan portion will be interest-free for 12 months with no repayment obligations during this period
  • Repayment of the loan to commence from month 13
  • You need to formally go through company registration with CIPC
  • Provide thorough financial viability before the COVID-19 outbreak
  • Be SARS registered and compliant

Here are the documents needed: 

  • Annual financial statements for the financial period ended 28 February 2019, signed off by a professional accountant
  • Management accounts for the period 01 March 2019 until at least 31 December 2019
  • The latest available EMP201 document submitted to SARS, not older than three months
  • three months’ bank statements of the business for the period 01 December 2019 to 29 February 2020 to assess operations before the lockdown
  • A rental (premises) statement, not older than three months
  • The statements for any other credit agreements such as asset finance or trade finance loan agreements as at 31 January 2020
  • Motivation and supporting documentation clearly illustrating the financial distress suffered by the SME as a result of the COVID-19 outbreak. The motivation can cover the following information: Reduction in turnover; Erosion of working capital; Inability or difficulty to pay wages and preserve jobs; Inability to pay rent; Inability to pay for other overheads; Inability or difficulty in servicing existing debt obligations; or all of the above
  • Statement of assets and liabilities for the main business owner
  • Copies of identity documents of all directors, shareholders, members, and trustees as applicable
  • Copy of marriage certificate including ANC contract, divorce certificate, or death certificate where applicable
  • Company documents
  • Copy of registration certificate
  • Copy of memorandum of incorporation
  • Copy of the company’s share register

Close corporation

  • Founding statement
  • Trust documents (if applicable)

– Copy of the trust deed

– Copy of the Master’s Authority Certificate

– Copy of IDs of all trustees

  • Confirmation of bank account details issued by the relevant bank