2020-07-28 05:06:28COVID-19EnglishLearn about the business support services and relief measures you may be able to take advantage of if you’re a small business owner in...https://quickbooks.intuit.com/za/resources/covid-19/the-covid-19-small-business-support-measures-you-can-take-advantage-of/COVID-19 small business support measures | QuickBooks

The COVID-19 small business support measures you can take advantage of

6 min read

In the wake of the coronavirus (COVID-19) outbreak, many small businesses in South Africa have faced shutdowns or a significant loss of revenue. 

The good news is that the South African government and other organisations have introduced business support measures to help SMBs stay afloat during these challenging and unprecedented times.

In this article, we cover various business support services and relief measures you may be able to take advantage of if you’re a small business owner in South Africa. 

SMME Debt Relief Finance Scheme

The Department of Small Business Development has introduced a Debt Relief Finance Scheme to support businesses that are negatively affected, directly or indirectly, by the coronavirus pandemic. 

The scheme will provide soft-loan funding for existing businesses in South Africa, available for six months from 1 April 2020. Businesses can apply for a longer period of assistance if additional assistance is required. Payments will be structured to match the business’ typical cash flow.

This funding is designed to help businesses manage existing debts and payments, and to pay labour and operational costs. 

Who is eligible?

To be eligible, a business must:

  • Have been registered with CIPC by at least 28 February 2020
  • Be 100% owned by South African citizens
  • Have at least 70% South African employees
  • Be registered and compliant with SARS and UIF

How do you apply?

To apply for the SMME Debt Relief Finance Scheme, register on the National SMME Database and complete the application form.

You’ll also need to provide supporting documents, including:

  • Proof that your business has been negatively affected by the COVID-19 pandemic
  • Statutory documents
  • FICA documents (such as municipal accounts, or a letter from a traditional authority for businesses based in rural areas)
  • Three months of bank statements
  • Latest annual financial statements or latest management accounts
  • Six months’ cash flow projections
  • Copy of your lease agreement, if applying for rental relief
  • Details of employees, if applying for payroll relief 
  • Detailed breakdown of where the funds will be used (such as salaries or rent)

SMME Business Growth Resilience Facility

The SMME Business Growth Resilience Facility is designed to provide working capital, stock and bridging finance to businesses able to take advantage of coronavirus-driven supply opportunities. This includes businesses that manufacture or supply in-demand products like hand sanitiser and face masks.

Who is eligible?

To be eligible, a business must:

  • Have been registered with CIPC by at least 28 February 2020
  • Be 100% owned by South African citizens
  • Have at least 70% South African employees
  • Be registered and compliant with SARS and UIF

How do you apply?

To apply for the SMME Business Growth Resilience Facility, register on the National SMME Database and complete the application form.

You’ll also need to provide supporting documents, including:

  • FICA documents (such as municipal accounts, or a letter from a traditional authority for businesses based in rural areas)
  • Three months of bank statements
  • Latest annual financial statements or latest management accounts
  • Six months’ cash flow projections
  • Relevant industry certifications, where applicable
  • Estimations for funding requested

The South African Future Trust (SAFT)

The South African Future Trust (SAFT) is an independent trust that was set up in partnership between the South African government and the private sector in response to COVID-19. 

SAFT provides interest-free loans to qualifying small businesses for the purpose of paying permanent employees who are at risk of losing their jobs or suffering loss of income. SAFT will transfer funds directly to employees of participating businesses. 

Employers will not be charged interest, however loans need to be settled in full with SAFT by 31 December 2025.

Who is eligible?

To be eligible, a business must have:

  • An annual turnover of less than R25 million
  • Been trading for at least 24 months
  • Been viable business on 29 February 2020
  • Been adversely affected by the COVID-19 pandemic

How do you apply?

You can register your interest directly with your bank. Currently, SAFT loans are available to clients of ABSA, FnB, Mercantile Bank, Nedbank and Standard Bank. 

To apply, you’ll need to provide:

  • Business identification (a registration number for a company or a close corporation, a Master’s reference number for a trust, or an ID number and business address for a sole proprietor)
  • A valid PAYE number registered with SARS, if applicable
  • A valid income tax number registered with SARS
  • Confirmation of permanent employment status of employee

Find out more about SAFT here.

The SEFA Debt Restructuring Facility

The Small Enterprise Funding Agency (SEFA) Debt Restructuring Facility is aimed at businesses that are already funded by SEFA and are negatively affected by the COVID-19 outbreak. Under this facility, SEFA will grant a repayment holiday on loans for up to six months.

Who is eligible?

Businesses that are funded by SEFA and have been impacted by the coronavirus pandemic.

How do you apply?

To apply for the SMME Debt Restructuring Facility, register on the National SMME Database and complete the application form.

You’ll also need to provide supporting documents, including:

  • FICA documents (such as municipal accounts, or a letter from a traditional authority for businesses based in rural areas)
  • Three months of bank statements
  • Latest annual financial statements or latest management accounts
  • Six months’ cash flow projections
  • Relevant industry certifications, where applicable
  • Copy of contract or order
  • Estimations for funding requested

What should I do if I can pay my employees?

The unfortunate reality is that many businesses have been forced to lay off employees, or haven’t been able to pay normal employee salaries, as a result of the COVID-19 pandemic. 

If your business revenue is suffering and you can’t make payroll, consider applying for one of the business relief measures above to keep the cash flowing temporarily. If you aren’t eligible for financial support or otherwise can’t pay your employees their usual salary, consider:

  • Reducing work hours for some or all employees
  • Reducing wages for a defined period
  • Introducing deferred wage schemes or pay freezes
  • Introducing furlough leave i.e. temporary employee leave under special circumstances
  • Encouraging staff to take annual leave
  • Moving employees to other areas of the business that need support

Retaining your employees wherever possible will help ensure you can ramp up operations quickly when life returns to normal.

Is the SARS tax deadline delayed?

As it stands, SARS has not extended tax deadlines and is requiring businesses that have not already submitted a tax return for the 2019-2020 tax season to do so as soon as possible. 

However, South Africa’s National Treasury will be introducing a new tax subsidy of R500 per month to employers for the next four months. The treasury also said it would also permit businesses with revenue of R50 million or less to delay paying 20% of their employees’ tax liabilities over the next four months.

As South Africa finalises its Disaster Management Tax Relief Bill, you can read more updates about SARS tax relief here.

How to prepare your business for the ‘other side’ of COVID-19

While every day may bring new challenges for your business at the moment, keep in mind that the situation won’t last forever, and getting prepared now will put you in good stead for the future. 

Speak to your accountant or bookkeeper as soon as possible and ask how you can make up losses or reallocate budgets to stay afloat for as long as possible. Also seek out advice from relevant consultants and professionals who can help you understand fines, penalties and other financial repercussions of the pandemic, and offer advice on your best next steps.

With the right strategy and support system, you’ll be able to navigate the uncertainty of the moment, and even come out on top when the market turns around.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.
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