Since the occurrence of Covid-19 and the subsequent lockdown and financial/economic distress experienced by both businesses and individuals, there have been a number of initiatives launched by both Government and other sources which seek to ease the financial burden.
This communication serves to provide you with some guidelines as to where you may seek assistance.
TERS – UIF Temporary Relief System
| Target Market | UIF registered companies |
| Type of Support | Benefits calculated based on income replacement rate sliding scale, capped at R17,712 per month, or a maximum payout of R6,730 per staff member claimed for. |
| Duration | Duration of the lockdown or three months. |
| Eligibility | Reason for closure must be linked to COVID-19 pandemic. Claims do not depend on the employee having UIF credits. |
| Method of application | Online submission – https://uifecc.labour.gov.za/covid19/ Email address – covid19ters@labour.gov.za |
COVID-19 SMME Debt Relief Finance Scheme
| Target Market | SMMEs |
| Type of Support | Soft loan funding for six months, starting from 1 April 2020 Based on application form submission and approval. |
| Duration | Six months from 1 April 2020. |
| Eligibility | Be registered and compliant with SARS and UIF. Owned 100% by South African citizens. 70% of employees are South African citizens. Priority given to businesses owned by women, youth and people with disabilities. |
| Method of application | Registration on the national SMME database https://smmesa.gov.za debtrelief@seda.orgza for assistance with microenterprises |
Business Growth/Resilience Facility
| Target Market | Businesses geared to take advantage of supply opportunities resulting from the Coronavirus pandemic or shortage of goods in the local Market. |
| Type of Support | Loan funding @ prime-5%. Working capital: stock, bridging finance, purchase order finance, capital requirement finance. |
| Duration | Duration of the lockdown or three months. |
| Eligibility | Be registered and compliant with SARS and UIF. Owned 100% by South African citizens. 70% of employees are South African citizens. Priority given to businesses owned by women, youth and people with disabilities. Businesses were not experiencing financial difficulty prior to COVID-19. |
| Method of application | Registration and upload documents https://smmesa.gov.za debtrelief@seda.orgza for assistance with microenterprises. |
IDC COVID-19 Supplies Intervention
| Target Market | Sectors impacted by supply chain interruptions and market loss problems. |
| Type of Support | Short-term loan from banks, underpinned by guarantees to banks from IDC (2% pa). IDC loan and trade finance facilities Prime plus 1% pa. |
| Duration | As negotiated with the relevant finance house. |
| Eligibility | Any sector that is impacted in the following way: Supply chain interruptions. Access to raw materials – cost and quality. Access to markets – perishable products lost in transit due to longer delivery periods. Working capital interruptions – longer lead times. Market loss – e.g. export markets constrained by logistics or replaced by production. Surge of imports to address the spike in demand; Underpinning budgets – impact of extended downtime. Reduced productivity – based on issues relating to staff welfare. |
| Method of application | Follow link to https://www.idc.co.za/2020/03/24/idc-interventions-in- response-to-covid-19/ |
COVID-19 Guaranteed Loan Scheme
| Target Market | SMMEs |
| Type of Support | Short term loan from banks, underpinned by the South African Reserve Bank. |
| Duration | Loans will cover up to three months of operational costs and will be drawn down monthly. Single agreed lending rate by all participating banks that tracks the repo rate. A six-month repayment holiday will commence from the first drawdown, although interest will accumulate from the date on which the first drawdown on the loan occurs. Repayment of interest and capital starts after six months and businesses have a maximum of 60 months to do so. Borrowers can repay the loan ahead of schedule. |
| Eligibility | Businesses with an annual turnover of less than R300 million in good standing with their commercial banks. Business’ owners may be required to sign surety for the loan. Only one COVID-19 loan per business. |
| Method of application | Please contact your bank for further details and eligibility criteria. |
The SA Future Trust (SAFT) Known as the Oppenheimer Family Fund
| Target Market | An initiative aimed at supporting SMME’s that are financially impacted by COVID-19. |
| Type of Support | Business will qualify for R750 per permanent employee per week for 15 weeks, in the form of a loan at prime -5%. |
| Duration | 15 week period. |
| Eligibility | Operating for 12 months. Maximum loan R15 million. Directors do not qualify. Annual turnover of less than R25 million. Must have had a sustainable business on 29 Feb 2020. Must be adversely affected by COVID-19. Must be CIPC registered. Valid income tax number with SARS. Ability to confirm permanent status of staff. |
| Method of application | Follow link to https://smmesa.gov.za |
PAYE Deferrals
| Target Market | Tax Compliant SMMEs |
| Type of Support | Deferral of payment of 20% of the PAYE liability, without SARS imposing administrative penalties and interest for the late payment thereof. The deferred PAYE liability must be paid to SARS in equal instalments over the six month period commencing on 1 August 2020, i.e. the first payment must be made on 7 September 2020. |
| Duration | The proposed amendments are deemed to have come into operation on 1 April 2020 and end on 31 January 2021, therefore impacts 7 May PAYE payment – not 7 April. |
| Eligibility | CIPC registered companies (registered prior to 28 February 2020). Tax compliant businesses. Small and medium sized businesses (annual turnover not exceeding R50 million for the 2020/2021 financial year. |
| Method of application | https://www.sars.gov.za |
PROVISIONAL TAX Deferrals
| Target Market | Tax Compliant SMMEs |
| Type of Support | Deferral of a portion of the payment of the first and second provisional tax liability to SARS, without SARS imposing administrative penalties and interest for the late payment of the deferred amount. |
| Duration | The first provisional tax payment due from 1 April 2020 to 30 September 2020 will be based on 15% (not 50%) of the estimated total tax liability. The second provisional tax payment from 1 April 2020 to 31 March 2021 will be based on 65% (not 100% of tax liability) of the estimated total tax liability. Provisional taxpayers with deferred payments will be required to pay the full tax liability when making the third provisional tax payment in order to avoid interest charges. |
| Eligibility | CIPC registered companies (registered prior to 28 February 2020). Tax compliant businesses. Small and medium sized businesses (annual turnover not exceeding R50 million for the 2020/2021 financial year. |
| Method of application | https://www.sars.gov.za |
The abovementioned funding and tax reliefs are not an exhaustive list and one may find banking houses and private consortiums are offering additional or alternate funding, should you not be eligible for the abovementioned initiatives. Please bear in mind when sourcing assistance you should consult with your accountants and legal team/advisors as to the long term impact on your business.
