Vutivi Business News: New Bounce Back loan guarantee scheme for small business
Ramaphosa says they are working to improve the business environment for companies of all sizes
A newly redesigned loan guarantee scheme aimed at small businesses to bounce back from the pandemic and civic unrest will soon be introduced in the country said South African President Cyril Ramaphosa last night. In his State of the Nation Address, the president said the new bounce-back scheme included the lessons from the previous loan guarantee scheme used by small businesses.
“It will involve development finance institutions and non-bank SME providers in offering finance, expand the types of financing available and adjust eligibility criteria to encourage greater uptake,” he said Ramaphosa added that the National Treasury was working with industry stakeholders to finalise the scheme and details would be provided soon.
Several new financial schemes aimed at small businesses have been in place since 2020 at the height of the COVID 19 pandemic. These included the Debt Relief Finance Scheme which targeted small and medium businesses negatively affected, directly or indirectly, due to the Coronavirus pandemic.
This facility was a soft-loan aimed at assisting existing SMMEs to keep them afloat during the Covid-19 pandemic for a period of 6 months from April 2020. The government also introduced the Debt Restructuring Facility geared towards Small Enterprise Finance Agency (SEFA)-funded small, medium, and micro enterprises (SMMEs) which are negatively affected by the pandemic.
A payment moratorium/holiday was given to the qualifying SMMEs for a maximum period of 6 months, to reduce the installment burden of loan obligations on the affected SMMEs. With regards to the regulatory environment for businesses, the president said the Business Act was also being reviewed alongside a broader review of legislation that affects SMMEs –to reduce the regulatory burden on informal businesses.
“There are too many regulations in this country that are unduly complicated, costly and difficult to comply with. This prevents companies from growing and creating jobs. “We are therefore working to improve the business environment for companies of all sizes through a dedicated capacity in the Presidency to reduce red tape. “If we are to make progress in cutting unnecessary bureaucratic delays for businesses, we need dedicated capacity with the means to make changes.
He announced the appointment of Sipho Nkosi to head up a team in the presidency to cut red tape across government. Nkosi has extensive experience in business, including as the CEO of Exxaro Resources, and is currently the Chairperson of the Small Business Institute. The President said the red tape team will identify priority reforms for the year ahead, including mechanisms to ensure government departments pay suppliers within the required 30 days.
by Vutivi Business News – https://www.vutivibusiness.co.za/finance/new-bounce-back-loan-guarantee-scheme-for-small-business/