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SMEs can apply for funding from R200bn Covid-19 Term Loan Scheme

Financially distressed SMEs can now apply for funding from the R200bn Covid-19 Term Loan Scheme as it started operating today. Photo: African News Agency (ANA) Archives

Financially distressed SMEs can now apply for funding from the R200bn Covid-19 Term Loan Scheme as it started operating today. Photo: African News Agency (ANA) Archives

Published May 12, 2020

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JOHANNESBURG - Financially distressed small and medium-sized enterprises (SMEs) can now apply for funding from the R200 billion Covid-19 Term Loan Scheme as it started operating today following the finalisation of legal details. 

The Covid-19 loan scheme is a special credit facility that is being disbursed on behalf of SA Reserve Bank (SARB) and National Treasury using the infrastructure of the banking industry.

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It would provide loans, guaranteed by the government, to businesses with an annual turnover of less than R300 million to meet some of their operational expenses. 

In a joint statement, Treasury, Sarb and the Banking Association South Africa said the scheme had started to operate from today.

They said the initial set of participating banks were ready to accept loan applications from distressed businesses which bank with them.

Participating banks include Absa, First National Bank, Investec, Mercantile Bank, Nedbank and Standard Bank.

Businesses must show they were in good standing with their banks prior to the onset of the Covid-19 pandemic as all loans will be subject to bank credit approvals.

Companies also need to have insufficient normal borrowing capacity to fully fund monthly operating expenses and be adversely impacted by the lockdown.

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The scheme will allow qualifying businesses to apply for loan funding from their primary bank for three months of operational costs, such as salaries, rent and supplier payments.

Government and commercial banks are sharing the risks of these loans. 

Initially, the National Treasury had provided a guarantee of R100bn to this scheme, with the option to increase the guarantee to R200bn if necessary and if the scheme is deemed successful.

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