Samantha’s Cell Plus Sound shop in the Joburg CBD. Picture: JAMES OATWAY
Samantha’s Cell Plus Sound shop in the Joburg CBD. Picture: JAMES OATWAY

Funding assistance has provided a lifeline for some of the small and medium enterprises (SMEs) struggling to survive the impact of Covid-19 but accessing it is not always easy and the strings attached could have long-term consequences for the businesses.

Many financial relief products are now on offer to the hard-hit sector but it is no easy feat to establish what is available, where to apply and what the terms are. There are websites that try to consolidate this information, but few, if any, are comprehensive.

"SMEs are battling," says Jeremy Lang, regional general manager of Business Partners, a leading financier in the sector.

He says there is "opportunity and support" but no central point where entrepreneurs can access the information they need.

R206bn

Funds available for small and medium-sized businesses in 15 funds

Business Times has identified 15 funds with specified amounts totalling just over R206bn, as well as an additional 10 funds with unspecified amounts. They range across sectors and include instruments such as loan offerings with various terms, equity buy-ins and grants.

The largest funds are the R200bn Covid-19 loan scheme announced by President Cyril Ramaphosa in April, which is administered by the commercial banks on behalf of the South African Reserve Bank and the National Treasury; the R1bn Sukuma relief programme managed by Business Partners; and the recently announced R1bn township and rural economy fund, a partnership between the Black Business Council (BBC) and Ubank.

The BBC/Ubank fund will offer five-year financing for black business ventures, entrepreneurs and start-ups.

Many funds have not released figures for applications or amounts, but some information is starting to become available.

The department of small business development (DSBD) said last month it had allocated R513m to 1,497 applicants as the initial tranche of its SME debt relief scheme.

It received a total of 35,865 applications, it said, but 21,414 of these were incomplete. The rest are still being processed.

The department of agriculture, land reform & rural development said 55,155 applications had been received for help under the Covid-19 agricultural disaster fund.

The minister of agriculture, Thoko Didiza, said so far 15,036 smallholder and communal farmers had been approved for a total of just over R500m.

She said those approved included 5,494 women, 2,493 young farmers and 224 people living with disabilities.

"Livestock has been the most requested commodity by farmers, followed by vegetables, poultry and fruits," Didiza said.

"Each of the approved farmers will receive inputs in line with the size of their farming operations up to a maximum of R50,000."

But the minister said many SMEs had been rejected for funding because they could not prove they were involved in farming.

In other sectors, problems have also arisen.

According to the National Small Business Council, many SMEs are not eligible for funds under the DSBD relief programme.

"The key point here is that many SMEs . do not meet the broad-based BEE requirements and are not [tax] compliant. Only 6% of applicants eventually receive funding," said the council's CEO, Mike Anderson.

He cautions: "All the funding programmes are predominantly loan-based, some being low interest and some not. What is important here is that although there is short-term relief, SMEs will put themselves further into debt."

Anderson advises SMEs to be "brutal on all expenses and rather opt for a debt payment holiday than a fixed loan".