Department of small business development
Registration is now open, on www.smmesa.gov.za, for small and medium-sized businesses that require help during the corona virus crisis.
- The department of small business development has promised a debt-relief fund for small businesses. Applicants will be screened by way of that register.
- The process is, apparently, for now, separate from the Solidarity fund President Cyril Ramaphosa announced on Monday night .
Debt Relief Fund, Business Growth & Resilience Facility Over R500 million has been available to assist small and medium enterprises (SMEs) who are either:
- in distress due to the impact or potential impact of the COVID 19 pandemic, or
- are able to participate in supply value-chains of items which are in demand due to the pandemic
Based on the needs of your business, if you are eligible you will be able to apply for working capital (inventory, order, cashflow) and/or equipment finance. You will be able to apply for financing at an interest rate of prime minus 5%. This would mean an interest rate of 3.75% per year. If you are approved, you will be given a payment holiday and have your loans restructured. How this will look is still to be confirmed by the department. What type of SMEs will qualify to apply will be guided by National Command Council in determining which sectors are deemed severely impacted. Priority will be given to businesses owned by Women, Youth and People with Disabilities.
In some cases one of the requirements for relief is that your company must be registered with CIPC by 28 Feb 2020.
If your company is not registered, and you traded as a sole trader, we strongly recommend that you do register your company with CIPC as we expect that the clause might be changed to when you apply as there are many sole traders, with legitimate businesses that will be unfairly excluded from receiving help.
By registering your company with CIPC you will also in future be able to get company loans easier as most financial institutions don’t deal with sole traders.
Another aspect is that company tax is less than tax in you private capacity.
We plan to assist sole traders, if so required, to get their companies registered with CIPC, submit their applications under their new company name but with all the required documents in the sole traders name together with a strong recommendation and motivation for help.
SMEs wanting to apply will need to meet the following criteria:
- You must show a direct link between the impact or potential impact of the COVID 19 pandemic on your operations and loss of income to your business:
- the business must have been registered with CIPC by at least 28 February 2020;
- must – be a 100% owned by South African citizens
- should employ at least 70% South African nationals
- must be registered and compliant with the South African Revenue Service (SARS) and the Unemployment Insurance Fund (UIF)
At this stage, the amounts to be applied for are still to be confirmed. There are still engagements in place with the minister and president and business representatives. However, the department is accepting applications. It is important you register on the relevant website detailed bellow.
Not required when registering, the following documents will be required during the application process:
- CIPC Registration Documents
- FICA documents (e.g. Municipal accounts, letter from traditional authority)
- ID Copies of Directors/members
- 3 months Bank Statements
- latest Annual Financial Statements or Management Accounts not older than three months from date of application
- business Profile
- 6 months Cash Flow Projections – where applicable
- relevant Industry Certification – where applicable
- estimations for funding requested
The intention of this fund is to insist those most in need. Anyone who tries take advantage of the crisis will be punished with their interest rates increased to prime plus 10%. This would mean chancers will have to pay 18.75% per year.
The process and payout timelinss have been detailed as:
- seven working days to process an SMMEs’ application for funds for debt relief and if approved
- it would take a further five working days to disburse funds to SMMEs for debt relief
CURRENT STATUS: currently accepting registrations at www.smmesa.gov.za
• registration on the National SMME Database: https://smmesa.gov.za/
• complete the simplified online application form available from Thursday April 2 2020 on: www.dsbd.gov.za; www.sefa.org.za: https://seda.org.za
• upload Required Supporting DocumentsCompanies can specify the kind of assistance they require, but there is no indication what might be on offer.
Businesses that are involved in critical sectors, from manufacturing masks to the distribution of food, are expected to receive priority support.
The small business department last week announced plans for the website after it was "inundated" by questions from the SMME sector.
It said the registration database would also be used to alert micro, small, and medium-sized businesses about opportunities and market support measures to be implemented in future.
The department said it planned a Business Growth/Resilience Facility, with the implication that debt relief and similar measures would be available.
SMME_Business_Growth_Resilience_Facility.pdf" target="_block">SMME Business Growth Resilience Facility Form. CLICK TO DOWNLOAD
Businesses geared to take advantage of supply opportunities resulting from the Coronavirus pandemic or shortage of goods in the local market.
SMME_Debt_Relief_Scheme.pdf" target="_block">SMME Debt Relief Scheme Form CLICK TO DOWNLOAD
Businesses which are negatively aected, directly or indirectly, due to the Coronavirus pandemic;
COVID-19-Finance-Relief-Application-BR1.pdf" target="_block">COVID Finance Relief Application Form CLICK TO DOWNLOAD
COVID-19 SMME COMMON APPLICATION FORM
WHAT ARE YOU APPLYING FOR? PLEASE CHOSE ONE OF THE FOLLOWING:
Business Growth /Resilience Facility (complete and send to email@example.com)
Debt Relief Finance (complete and send to firstname.lastname@example.org)