State’s small business Covid-19 fund needs billions more
SMMEs need another R4.4bn as applications far outweigh the funding already used, says the department of small business development
The first tranche of government money set aside to support small businesses through the Covid-19 crisis is now fully subscribed, but applications for help far outstrip the money available
The department of small business development announced on Friday that the first window of its small, medium and micro-enterprises (SMME) debt relief scheme will close on May 23, having approved 1,497 applications for support worth R513m.
However, about R4.4bn in extra funding is needed to cover the thousands of small firms that have completed applications. This surpasses the additional R2bn the department is set to receive through the government’s economic stimulus package announced by President Cyril Ramaphosa last month.
The stimulus package was launched to support the economy through the worst of the lockdown put in place to slow the spread of the coronavirus.
According to a statement from the department, 35,865 applications were received through its finance arm, the Small Enterprise Finance Agency. Of these, 14,451 were fully completed, with the required documentation. A further 21,414 were incomplete, according to the department, and have been referred to the Small Enterprise Development Agency for assistance in completing the applications.
The remaining balance of completed applications — 12,954 — requires R4.4bn in funding, according to the department.
“The [department] will continue to engage with the National Treasury on this funding gap required for those that have already applied,” the department said, adding that the bulk of the applications requested help with salary payments, amounting to R3.6bn.
The department said it has entered into an agreement with the Unemployment Insurance Fund (UIF) to ensure SMMEs that did not qualify for payroll assistance due to non-compliance can be covered by the fund. This is on condition that they agree to an acknowledgment of debt as well as payment terms with the UIF.
As well as the debt relief scheme, the department has rolled out support efforts for spaza shops and informal businesses.
The SMME debt relief scheme was launched at the start of April, with an initial R513m, to assist small businesses with working capital to cover rental costs, help pay utility and municipal bills, and to provide payroll assistance. The payroll assistance is to help employers with employees that do not qualify for UIF relief, on condition that they register their workers with the fund.
It was launched with the department’s business growth and resilience facility, however, due to the overwhelming demand for relief and several fraudulent applications, the growth and resilience fund was put on hold and is being reworked to provide SMMEs with long-term support in the economic recovery process.
Private-sector support programmes for SMMEs have seen a similar influx of requests for help and have also been rapidly depleted. The SA Future Trust — set up with money from the Oppenheimer family — announced recently that its R1.12bn in funds have been fully subscribed.