How SMEs can access relief packages.
According to a recent survey done by Retail Capital, 69,8% of local small and medium enterprises (SMEs) are closed as a result of the national lockdown, with 85% reporting a decreased turnover. As such, the South African Government, big businesses and civil society have recognised the impact that COVID-19 is having on local small businesses and have implemented a host of relief packages.
To help SMEs take advantage of these packages, Nadine Chetty, co-founder at E-comm Accounting Solutions and Intuit QuickBooks trainer, says that there are two important steps that business owners can take in order to access most of these relief measures. “Firstly, small businesses need to be tax compliant. If they are compliant, business owners need to register on www.smmesa.gov.za to take advantage of these opportunities.”
Tax compliance means business owners must have a valid tax clearance certificate, as well as management statements and annual financial statements. “If you don’t have these, you will need to get them up to date as soon as possible,” she says.
Although compliance is not always an SME owner’s first concern, the current situation shows the importance of this, Chetty adds. “In order to remain compliant it is vital that management statements and annual financial statements are up to date. As such, it is advisable that business owners utilise the help of an accountant or financial advisor.”
Chetty points out that accountants and financial advisors are still able to operate during a lockdown. She says that for example, in her practice they are able to still keep their clients SARS compliant even during this time by using Cloud Accounting Software like QuickBooks Online which allows them to work with their SME clients from anywhere at any time. “It is key that small and medium-sized business owners take this time to focus on their business’s finances and admin, which is often forgotten as most business owners focus most of their attention on running their companies.”
In order to assist small business owners that are tax compliant, Chetty has compiled a list of relief and funding options:
Registering as an essential service business
You can keep your business open if it offers essential goods or services. You can apply on the BizPortal website.
This is administered by The Department of Tourism to help SMMEs in the tourism and hospitality sector who are under particular stress due to COVID-19 travel restrictions. The Fund Value is R200 million.
- Registered legal entity with CIPC
- 100% Black-owned entity
- Turnover does not exceed R 2 500 000
- Must be SARS Tax Compliant (Tax Clearance is required)
- Proof of minimum wage compliance
- Proof of employees registered in UIF
- Guarantee employment of staff for a minimum of three months
- Must have traded for at least one financial year
You can apply by emailing firstname.lastname@example.org
Debt Relief Finance Scheme & Business Growth/Resilience Facility
Administered by the Department of Small Business Development to help businesses that are negatively affected, directly or indirectly, by the COVID-19 pandemic. Its aim is to mitigate against job losses and the expected harsh economic impact. The Fund Value is R500 million.
- Must be registered with CIPC by at least 28 February 2020
- Must be 100% South African citizen-owned
- Employees must be 70% South African
- Priority for funding will be given to businesses owned by Women, Youth and People with Disabilities
Apply at www.mybindu.org.za
Small Enterprise Finance Agency (SEFA) Funding
The Industrial Development Corporation will disburse and manage this fund. The SEFA funding is restricted to the following sectors:
- Retail, wholesale and tourism industry
- Production industry
- Agriculture industry
- Construction industry
- Mining industry
Please note that as with SMME funding, an audit will be carried out in future and those failing the audit will be required to repay the money at penalty interest rates.
More information, visit: http://www.sefa.org.za/
SAFT – SA Future Trust
This is the Oppenheimer relief fund. It will support SMME employees at risk of losing their jobs or who will suffer loss of income due to COVID-19. Fund Value is R1 billion. You will receive R750 per week per employee for 15 weeks.
- Annual turnover must be below R 25 million
- Entity must be trading for 24 months
- The business must have been sustainable on 29 February 2020
- Repayment: 5-year 0% interest free loan
- Your business must be an ABSA, FNB, Nedbank or Standard Bank Client
- You can register directly with your bank
Spaza Shop Grant Funding
This fund is administered by the Department of Small Business in collaboration with SEFA. The Fund Value is R30 million.
- R 10 000 will be made available for purchasing a basket of essential goods at a discounted price for a period of three months from participating wholesalers
- Sole Proprietors operating spaza shops will qualify
Natural Disaster Benefit (UIF)
This benefit can be used if the employer decides as a direct result from the COVID-19 pandemic to close its business for a period and to send employees home. This is deemed to be a temporary lay-off.
- The employee can claim from UIF if the employer cannot afford to pay their salaries
- The employer has to apply on behalf of the employee
- You cannot claim this benefit and the normal UIF benefit simultaneously
- Value of the benefit: R 3 500 per employee per month
- Term of the benefit: The shorter of the duration of the shutdown or 3 months
COVID-19 Temporary Employer/Employee Relief Scheme (TERS)
The fund’s purpose is to replace lost income to employees during temporary closure of business and for employees on quarantine. It is administered by National Disaster Benefit and UIF.
- Business must be registered with UIF
- The salary benefits will be capped to a maximum amount of R 17 712 pm per employee and will be paid in terms of the income replacement sliding scale (38% to 60%) as provided in the UI Act.
The employer must apply by emailing email@example.com
Tax Relief Measures
The Employment Tax Incentive has been expanded to include all employees earning below R 6,500 pm with a subsidy of an additional R 500, bringing the total ETI claimable up to R 1,500 per employee per month.
Businesses with a turnover of < R 50 million will be allowed to delay their PAYE tax payments over the next four months and their provisional tax payments over the next six months without incurring penalties.
The current situation has fostered a spirit of generosity in our society that gives everyone hope for now, and going forward. Chetty urges SMEs to take advantage of these relief measures to ensure a stable future for them and their employees.