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How the R200 billion loan scheme will help struggling companies during the COVID-19 pandemic
29 April 2020
Details have been released regarding the R200 billion loan scheme aimed at providing another lifeline to an estimated 70 000 businesses struggling through the COVID-19 crisis. The credit guarantee scheme was first announced by President Cyril Ramaphosa as part of the R500 billion fiscal stimulus package. The scheme aims to assist companies struggling with operational costs, support on salaries, rentals and the payment of suppliers. Companies with a turnover of less than R300 million per month will be eligible. The scheme will be facilitated by the major banks and in partnership with the South African Reserve Bank (SARB).
In a statement, according to Investec, several banks are likely to be able to roll out the scheme to eligible businesses before the end of April 2020. Eligible businesses must be registered with SARS, have a good record with their banks, have no further capacity to borrow and have financial distress due to the lockdown. The five-year loans would cover three months of operational costs in the businesses, with the loan drawdown monthly. All the participating banks will offer the same loan terms and businesses will not have to pay capital or interest on the loans for six months from the first drawdown. Business owners may be required to sign surety for the loan.
Orignally written by Edward West, IOL
