A Debt Relief Fund is on the horizon to assist small businesses impacted by the novel coronavirus, the Department of Small Business Development announced on Thursday.
The department said it had been “inundated with enquiries” from Small, Medium and Micro Enterprises (SMMEs) about measures to mitigate the financial impact of the virus on their businesses, amid interruptions in productivity and loss of income.
“The Debt Relief Fund is aimed at providing relief on existing debts and repayments, to assist SMMEs during the period of the Covid-19 State of Disaster,” the department said.
The value of the fund was not disclosed.
The facility would assist entities to acquire raw materials, and pay labour and other operational costs. Business owners must demonstrate a direct link between the impact or potential impact of the pandemic on their operations in order to be eligible for assistance, according to the department.
For eligible businesses, the fund will offer working capital, stock, bridging finance, order finance and/or equipment finance, and the amount required will be based on the funding needs of each business.
Enterprises seeking assistance must register on the SMME South Africa portal at www.smmesa.gov.za, which will open on 24 March.
Small businesses often face difficulties with raising capital, with limited resources to cushion them against various forms of economic shocks.
The announcement of a debt relief fund follows a meeting earlier this week between various government departments and social partners to find ways to mitigate the impact of the coronavirus on the country’s already struggling economy.
Minister of Trade and Industry, Ebrahim Patel, told journalists after the meeting that one of the key interventions would be “support for companies in distress”.
In other measures, the Reserve Bank on Thursday cut the repo rate by one percentage point, from 6.25% to 5.25%, citing a weak domestic economic outlook.
It warned that the impact of the virus may cause disruptions to supply chains and to normal business operations. The Bank expects the economy to contract by 0.2% in 2020, though it expects GDP growth to rise to 1.0% in 2021 and to 1.6% in 2022.