Over 100 000 Small and Medium Enterprises (SMMEs) have so far registered for government-driven financial relief aimed at cushioning the sector against the impact of the coronavirus.
This is according to the Department of Small Business Development, which is administering the funds announced last month as part of government’s interventions to assist small business who are hit hardest by the national lockdown, which was extended by President Cyril Ramaphosa on Thursday.
Minister Khumbudzo Ntshavheni said businesses in the manufacturing and services make up the largest number of applicants seeking assistance.
“During this period of national disaster, we are anticipating that some businesses will go under. Our approach is more focused on their survival and, or resuscitation in case they go under,” she said.
Ntshavheni said the first batch of funding is expected to be rolled out from next week.
Like many other sectors of the economy, a large number of small businesses which are not deemed essential service have shut their doors, leaving owners with no income to cover overheads and service loans. Other entities have not ruled out laying off staff.
Ntshavheni acknowledged the impact of the lockdown, describing it as “devastating on small businesses”. She added that government was already working on options for a Business Rescue programme to provide assistance for entities in distress.
The economy at large has already showed signs of slowdown and the South African Reserve Bank has forecast that growth may contract by between 2% and 4% this year as a result of the coronavirus pandemic. It also projected about 370 000 job losses and about 1 600 businesses going insolvent.
Businesses applying for Debt Relief, Business Growth Resilience and Finance Relief need to be registered with Companies and Intellectual Property Commission (CIPC), by at least 28 February 2020 and must be 100% owned by South African citizens, with 70% South African employees.
Private donors have also set up funds aimed at propping up SMMEs in the wake of the coronavirus pandemic, which disrupted the imports and exports of goods. The South African Future Trust, established by Nicky and Jonathan Oppenheimer with initial seed funding of R1 billion, provides interest-free loans to small business, in a move that has been hailed by government.
The Rupert family has also extend R1 billion towards the Sukuma Relief Programme, also also at assist small businesses financially impacted by Covid-19. The Fund on Monday announce that is has been oversubscribed, a few day before opening.
Ntshavheni said the two funds complement government’s interventions and helped to offload some of the financial burden that would otherwise have been carried by the state.
“We welcome all pledges of support to SMMEs from the private sector, in particular when there is implementation taking place,” she said.
Funding application can be submitted through this portal https://smmesa.gov.za/