WHAT IS THE COVID-19 SME LOAN SCHEME?

This loan scheme, announced by the president on 21 April 2020, is an initiative by government, in partnership with banks, to support the SME sector impacted by Covid-19. 

The scheme offers five-year-term loans at the prime lending rate to cover the next three months of business operating expenses.

DETAILS OF LOAN OFFERING

The following loan constructs are offered to qualifying SMEs:

• Term loan (66 months/5,5 years).
• Priced at prime interest rate.
• No payments due for the first six months (but interest accrues).
• After six months the loan is to be repaid through equal monthly instalments over five years.
• Loans can be repaid earlier in full without penalties.

The loan amount is determined by the operating expenses of the business:

• The loan covers up to three months’ full operating expenses.
• There is no upper limit, but the amount is driven by business needs and affordability.
• Operating expenses include salary and wages; rental and lease cost; utilities; supply-chain-related (eg transport and warehousing); and other operating expenses (eg security, cleaning costs and insurance).

Loan terms and conditions include the following:

• Businesses will be prohibited from paying dividends or repaying shareholder loans until the Covid-19 SME loan has been repaid in full.

All loans are subject to a full credit assessment.

QUALIFYING CRITERIA

Applicants must meet all the following criteria to be considered for this loan:

Operating entities – all business types, but specifically excluding individuals, state-owned entities, listed companies and companies with capital market funders or funding instruments.

• Turnover <R300 million per year.
• Registered with SARS.
• In good standing as at 29 February 2020 (ie up to date on all credit agreements, good credit history).
• Ability to demonstrate direct impact by Covid-19.
• Has exhausted its capacity to borrow from the bank under normal credit conditions.
   

APPLICATION REQUIREMENTS

Please note that businesses can only apply to their main/primary bank.

• Application form (see below).
• Latest annual financial statements.
• Management accounts (up to 29 February 2020).
• Cashflow forecast for the next 12 months.
• Optional: Personal position statement (PPS) for owners willing to provide personal surety.
   

APPLICATION PROCESS

Small Business clients to please complete the application form and prepared the required supporting documents, then to submit your application to your relationship banker.

Business Banking clients to please contact your business manager to apply.