There is now much-needed relief for small businesses.
National Treasury on Tuesday said that the COVID-19 loan guarantee scheme announced by President Cyril Ramaphosa in April was now in operation.
It said that the initial set of participating banks, including Absa, FNB, Investec, Mercantile Bank, Nedbank, and Standard Bank, were ready to accept loan applications from distressed businesses that banked with them.
Treasury said that the activation of the loan guarantee scheme followed the finalisation of legal aspects of the scheme by the department, the South African Reserve Bank (Sarb), and the Banking Association of South Africa (Basa).
“The loan guarantee scheme is an initiative to provide loans, guaranteed by government, to businesses with an annual turnover of less than R300 million to meet some of their operational expenses. Funds borrowed through this scheme can be used for operational expenses such as salaries, rent, and lease agreements, contracts with suppliers, etc.,” Treasury, Sarb, and Basa said in a joint statement.
Treasury said that government and commercial banks were sharing the risks of these loans and all those with queries should direct them to the individual banks, which were administering the scheme.
“The National Treasury has provided a guarantee of R100 billion to this scheme, with the option to increase the guarantee to R200 billion if necessary and if the scheme is deemed successful,” the statement said.
For official information about COVID-19 from the Department of Health, please click here.