South Africa’s Department of Small Business Development has announced plans to establish a Debt Relief Fund to help small businesses withstand the economic effects of the COVID-19 crisis.
The South African government has put in place several measures aimed at slowing the spread of COVID-19, many of which are highly likely to negatively impact small businesses in the country.
This is why the Department of Small Business Development has announced it will launch a Debt Relief Fund to provide certain businesses with relief on existing debts and repayments should the economy slow.
Minister Khumbudzo Ntshavheni said in a statement that the department had been “inundated” with queries from small businesses about mitigating the financial impact of the virus on their businesses, and needed to act.
“Government understands that SMMEs will be affected on two levels as businesses when the economy slows down and as suppliers of products and services during this period,” she said.
“The Debt Relief Fund is aimed at providing relief on existing debts and repayments, to assist SMMEs during the period of the COVID-19 State of Disaster.”
How exactly will this Debt Relief Fund help small businesses?
The facility, the value of which is undisclosed, will offer working capital, stock, bridging finance, order finance and equipment finance, with amounts provided based on the needs of each business.
“As the nation grapples with the impact of the COVID-19 pandemic, the department will be guided by the National Command Council in determining the sectors that are deemed severely impacted in order to qualify for the Debt Relief Fund,” Ntshavheni said.
“For SMMEs to be eligible for assistance under the Debt Relief Fund, the applicant must demonstrate a direct link of the impact or potential impact of COVID-19 on business operations.
“This facility will also assist entities to acquire raw material, pay labour and operational costs. All these interventions will be structured to match the patterns of the SMMEs cash flows, as well as the extent of the impact suffered,” she added.
For monitoring purposes and to prevent the facility from being abused, businesses requiring assistance will be required to sign up via a registration portal that will go live on the SMME South Africa portal on Tuesday, March 24.
Ntshavheni said that in the future, the database will also be used to apply for both financial and non-financial support, access information about business opportunities, and access market opportunities, .
Alongside the new fund, Ntshavheni said her department would also be launching a ‘Business Growth/Resilience facility’ which has been specifically created to enable continued participation of SMMEs in supply value-chains – particularly those which manufacture or supply items which are in demand due to the pandemic.
