With a repayment plan of 60 months, says Moneyweb.
The “donation” by the Rupert family that President Cyril Ramaphosa announced during the 21-lockdown speech is, in fact, a loan.
Small and Medium Enterprises (SMEs) may apply for funding from R250 000 to R1 million for the 60 months loan if they can prove that their business is in financial distress as a result of Covid-19.
On Sunday evening, Business Partners announced that they’ll be administering the R1 billion donation by the Rupert family and small business may apply by the end the week.
However, what has been confusing entrepreneurs is whether or not the donation is a loan or donation to ”assist” entrepreneurs as stated by the president, as the Business Partners managing director Ben Bierman said on Sunday, “We expect to make an announcement regarding the criteria, repayment terms and how to apply for the finance this week.”
Speaking to Moneyweb, David Morobe who is the Executive General Manager for impact investment at Business Partners gave the much-needed clarity on the donation.
He explained that for the first year, applicants will not be charged interest for the instalments, but thereafter they will be expected to do so.
“We are hoping by that time, the impact of Covid-19 would have tempered of society, but thereafter we want to go to commercial terms of assisting our small and medium enterprises,” says Morobe.
He says making the “donation” a loan and partly a grant was the most sustainable thing to do.
“We devised how to do that in a sustainable manner which is a partial grant and part loan to some of the small and medium enterprises.
“Some of the loans will be given on favourable terms to make them as cost-effective as possible so that they ride the impact of the pandemic that is unfolding at the moment,” says Morobe.
He says that if applicants can prove without reasonable doubt that their business is in financial distress as a result of Covid-19, due to the lack of flow of goods and services, as customers are in a lockdown they need to meet the following criteria.
- Must be South African owned
- Must be tax compliant
- Annual financial statements
- 3- months bank statement
- Proof of employees that may be assisted
- Rent statement
- Supporting documentation/ letter stating how your business is in distress as a result of Covid-19
“We are going to look at a number of factors from the applicants where we try to determine the present points and where they can prove to us that this was a result of the Covid-19 pandemic.
“So if you are a small business and can give us some documents that your business has been deteriorating as a result of Covid-19, we will consider your application,” says Morobe.
He urges that if SMEs do not receive the necessary finical assistance now, their chances of failure in the future will be high.
“If that business is not assisted now, the chances of it dying now are very high. So that is why we are trying to mitigate the risk,” says Morobe.
There will be no financial assistance to businesses in primary agriculture, mining and non-profit organisation.
Why not let the government administer the fund?
“It is an implementation channel that the patrons decided to use because Business Partners has been around for 39 years and it has proven systems and proper governance to deliver these funds.
“Government has got its own challenges in disbursing funds to small and medium enterprises and I think it has been said for a long time about late payments to SMEs,” says Morobe. Tweet