Helping small businesses survive COVID-19
As many small businesses struggle to keep afloat due to the impact of the coronavirus (COVID-19), they can find some relief from the interventions of the Department of Small Business Development (DSBD).
Minister Khumbudzo Ntshavheni says some of the interventions that the department has implemented include the Debt Relief Financing Scheme, Growth Resilience Facility for small, medium and micro-sized enterprises (SMMEs) and the Spaza Support Scheme.
“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 the lockdown. To mitigate the impact during the economic slowdown, we have come up with these interventions and we will be working with provincial departments to ensure the widest reach of SMME support,” the Minister says.
The support will ensure that businesses survive and are able to continue operating after the lockdown.
Debt Relief Financing Scheme
Minister Ntshavheni says the Debt Relief Financing Scheme is aimed at providing relief on existing debts and repayments.
“For SMMEs to be eligible for assistance under the scheme, the applicant must demonstrate the direct link of the impact or potential impact of COVID-19 on the business operations,” she explains.
The interventions will be structured to match the patterns of the cashflow of the SMMEs, as well as the extent of the impact suffered,” she says.
To strengthen monitoring and to avoid abuse, the department had to develop qualification criteria which it has put up on its website for businesses to follow as part of the application process.
The DSBD insisted on the use of this platform so that it could track, monitor and strengthen the impact of business development support to SMMEs by both government and the private sector during the lockdown and beyond.
“In future, the database will be used to apply for both financial and non-financial support, to access information about business opportunities and for market access support.”
This new intervention came into effect in the beginning of April and businesses that had already registered on the department’s database would receive a reference number to use when applying for funds.
Minister Ntshavheni says the turnaround time for applications and approval is around seven days at worst, while approval and disbursement of funds is expected to take five days.
Growth Resilience Facility for SMMEs
With regard to the Growth Resilience Facility for SMMEs, the Minister says it was specifically created to continue participation of SMMEs in the supply value-chain, in particular those who manufacture (locally) or supply various products that are in demand, emanating from current shortages due to the COVID-19 pandemic.
“This facility will offer working capital, stock, bridging finance, order finance and equipment finance and the amount required will be based on the funding needs of the business,” she says.
Minister Ntshavheni says the Small Enterprise Finance Agency (SEFA) will approve the rescheduling of the loan repayments for six months, to the value of R350 million to 250 clients.
She also released support packages for those in the informal sector. These include the Spaza Support Scheme, which opened in April.
This scheme includes dedicated networking, purchase power and bulk purchasing through pre-selected and pre-approved wholesalers. These will include buying a pre-approved basket of goods that includes produce procured from SMMEs.
“The scheme will also seek a credit facility with seed capital as some spaza shop owners are unable to access money to purchase stock.”
Support for spaza shop owners
This will be followed by a credit facility to enable spaza shop owners to continuously buy, even after the COVID-19 crisis is over.
Business management support will also be given to spaza shops, which often are not run as profitable ventures. The assistance will cover training in bookkeeping, customer services skills, stock-taking control and purchasing as well as the Occupational Health and Safety Act.
Spaza shops will be helped to access basic business tools, such as instant payment machines, speed points and other vending facilities.
Spaza shop owners wanting assistance will have to provide compliance documents. Applicants will also need Companies and Intellectual Property Commission, South Africa Revenue Service and Unemployed Insurance Fund registrations.
They must be owner-managed and operated, provide proof of an active bank account, be registered on SMMESA and have a permit to trade. Municipalities are on hand to assist with the latter.
“We are going to facilitate the licensing of owner-operated spaza shops where they are not licensed… We also assist spaza shop owners to open business accounts,” the Minister says.
Existing support programmes offered by the DSBD and its agencies to assist SMMEs remain in place and can be accessed through www.sefa.org.za, www.seda.org.za and www.mybindu.org.za