COVID-19: Financial relief options and advice to help entrepreneurs survive and thrive

The national lockdown is a source of concern for many small, medium and micro-sized enterprises (SMMEs), who have limited cash reserves and rely on a steady income to keep their doors open. However, South African entrepreneurs have proven themselves to be resilient and adaptable and they are a source of great pride and inspiration to the nation. To help our invaluable SMME owners, the government has announced a series of funding schemes. Entrepreneurs should also use this time to work on their businesses so that they are one step ahead of the competition when things return to normal. 

“Times of crisis are also great opportunities for innovation and entrepreneurship. And, while I am sure that many of you are feeling very anxious, you have already proven that you have the grit and determination to overcome obstacles and make the most of challenging times. I encourage all of you to stay positive and think about the opportunities this could present for your businesses going forward. The government has set-up a comprehensive website with COVID-19 news and useful resources, so be sure to check www.sacoronavirus.co.za regularly to keep up-to-date on developments,” says Bridgit Evans, SAB Foundation Director.  

From business funding to learning resources, the SAB Foundation has the following tips to help entrepreneurs weather the storm and come out on top.

1.   APPLY FOR FUNDING

There are a number of funding schemes to financially assist SMMEs and alleviate the impact of the current lockdown. These include the Debt Relief Fund, the Business Growth/Resilience Facility, the Solidarity Fund and the UIF Subsidy.

Debt relief fund: This fund is aimed at providing relief on existing debts and repayments. To qualify, SMMEs need to demonstrate the impact or potential impact of COVID-19 on their business operations. There is a helpful infographic created the Department of Small Business which details eligibility criteria and how SMMEs can apply, click here to see for yourself. 

Business Growth/Resilience Facility: The Business Growth and Resilience Facility is targeted at SMMEs who locally manufacture or supply hygiene and medical products that are in demand in order to curb and manage the spread of the COVID-19 virus. These are products such as sanitisers, detergents and tissue paper. This facility will offer working capital, stock, bridging finance, order finance and equipment finance. The funding amount will be based on the funding needs of the actual business. SMMEs may apply for this funding as well through the SMME South Africa platform: https://smmesa.gov.za/.

The Rupert’s R1bn donation: Small and medium enterprises (SMEs) may apply for R250 000 to R1 million in funding from the R1-billion donation the Rupert family made to assist businesses in financial distress as a result of Covid-19. An online application portal is expected to be launched soon through which SMEs can apply for assistance. Although there is no expectation on the part of Johann Rupert to receive anything in return for this donation, beneficiaries are encouraged to repay of the loan in order to “pay it forward” and allow future SMEs to apply for funding through the donation. Click here to apply: https://finance.businesspartners.co.za/.

The South African Future Trust (SAFT): The SAFT is an independent trust set up by Nicky and Jonathan Oppenheimer to extend direct financial support to the employees of SMMEs who are at risk of losing their jobs. This has been funded with an initial contribution of R1 billion, with the aim of mitigating the immediate economic impact of the COVID-19 crisis. SAFT funds will be disbursed as concessionary loans to qualifying SMMEs. These loans will be interest-free over a 5-year term and will be administered by the Partner Banks on behalf of SAFT. Funds will be transferred directly to the employees of the qualifying SMMEs, and the employees themselves will carry no liability. The scheme is currently available to clients of Nedbank, Absa, Standard Bank and FNB and SMMEs need to apply through their main bank.

The Temporary Employee Relief Scheme (TERS): TERS is an intervention which allows employers to pay staff directly during the Covid-19 pandemic and avoid retrenching any of your staff members. Employees will receive a wage payment through TERS. In terms of the TERS process, the UIF may fund your company if you are affected by COVID-19 directly in relation to the TERS allowance. This will be applicable to your company if you have the following: 

•  registered with UIF

•  compliant with the relevant UIF legislation, and

• making your required monthly contributions

 Should your business not be compliant, you will be able to undertake to pay outstanding contributions and bring your required declarations up to date within a stipulated timeframe. 

If this is an opportunity your business can benefit from, email covid19ters@labour.gov.za, for more information. You will receive an automated response outlining the procedure and information you will require.

Opportunity to submit proposals: SMMEs have been called on by government to submit proposals in the following categories: hygiene, medical products manufactured and critical services. The request for proposals is aimed at getting information on SMMEs that have the capability to participate in the manufacture and supply of goods that are needed towards the management of the impact of the Covid-19 pandemic. If this is an opportunity your business might benefit from, click here to find out more.

The Tourism Relief Fund: This fund provides once-off capped grant assistance to SMMEs in the tourism value chain to ensure their sustainability during and post the implementation of government measures to curb the spread of Covid-19 in South Africa. Capped at R 50 000 per entity, grant funding can be utilised to subsidise expenses towards fixed costs, operational costs, supplies and other pressure costs items. Categories eligible to apply for the Tourism Relief Fund include the following: 

• Accommodation establishments: Hotels, Lodges, Bed and Breakfast (B&B’s), Guest Houses and Backpackers. 

• Hospitality and related services: Restaurants (not attached to hotels); Conference venues (not attached to hotels), Professional catering; Attractions 

• Travel and related services: tour operators; travel agents; tourist guiding; car rental companies; and coach operators. 

For more information, or to apply, visit: https://www.tourism.gov.za/Pages/home.aspx

National Empowerment  Fund (NEF): R200 million funding has been made available  for black entrepreneurs to manufacture and supply a range of medical products to help the country flatten the curve of COVID-19. The NEF will administer this. To apply for this funding, click here

 For more information and categories that are eligible to apply, visit: https://bit.ly/2ReyeB8 

OTHER BUSINESS RELIEF MEASURES

Businesses that are struggling can try to negotiate with their landlords for a reduced rental.  It is not in a landlord’s best interest to lose their tenant, as they might not find anyone else at this time, so some may be prepared to compromise.

For those that have bank loans, the banks have said that they don’t want people to go out of business and, in most cases, are prepared to renegotiate payment terms during the lockdown. More information is available on their websites:

• Absa: click here

• Standard Bank: click here

• FNB: click here

• Nedbank: click here

Businesses can also negotiate with their customers by, for example, by offering them settlement discounts in return for early payments. Consider offering your clients the option of paying by credit card, if payment is made by a certain date, or asking clients to advance fee payments if you have fixed fee engagements. 

This is also a great time to review expenditure and processes to determine whether there’s an opportunity to save money in the long term. Be sure to get input from staff, as they often have great ideas when it comes to cutting unnecessary costs. 

2.   LOOK FOR OPPORTUNITIES TO WORK ON YOUR BUSINESS AND YOURSELF AS AN ENTREPRENEUR

While many may not be able to work at their businesses, they can still work on their businesses. This may include working on themselves as entrepreneurs, enrolling themselves or their team onto online courses or webinars to enhance their knowledge, refining business processes, building their brand, updating their website or doing neglected admin. There are also a variety of resources specifically aimed at helping businesses negotiate the COVID-19 crisis. 

Small Business COVID-19 Survival Guide: Marnus Broodryk, the author of ‘90 rules for Entrepreneurs’, has created a guide aimed at helping local entrepreneurs navigate the hurdles presented by the current health crisis and lockdown. This is good reading for all entrepreneurs. Click here to access the guide.  

Get rational quickly: In the current conditions, it’s important for entrepreneurs to make the right decisions to ensure that their businesses and their people’s livelihoods do not become another casualty of the virus. Allon Raiz, CEO of top business incubator Raizcorp, is creating a series of articles in which he shares his views and insights on surviving and even thriving despite the impact of COVID-19. His first article – Get rational quickly – is available here:  https://www.raizcorp.com/lockdown-advice-1-get-to-rational-quickly/

3.   TAKE CARE OF YOUR EMPLOYEES

Employees are one of a business’s most important resources and it is essential that business owners look after their needs during this uncertain and stressful time. For those who are still working during the lockdown, employers should do everything in their power to ensure that they are safe. 

The Department of Employment and Labour has developed guidelines around workplace controls, safe work practices and personal protective equipment aimed to reduce the spread of COVID-19. The workplace preparedness guide is available here https://www.labourguide.co.za/workshop/1773-covid-19-guideline-mar2020/file

 Keep in mind that many people are scared at the moment. If one of your workers is worried that they may have contracted the virus, consider paying for them to be tested. This will either ease their mind or allow you to address the issue quickly. It’s also a nice opportunity to offer staff moral support or let them know that you care about them. 

If, as a result of the lockdown, your business is in trouble, and it looks like you may not be able to pay salaries, consult your team to see if they have any useful suggestions. If it means saving their jobs, employees may be prepared to take unpaid leave or work for lower salaries. If you need to cut salaries, help your staff apply for funding from the National Disaster Benefit Fund. This will pay monthly Unemployment Insurance Fund benefits of R3 500 to qualifying workers whose income has been impacted by the COVID-19 crisis, for up to three months.

In order to claim benefits, employees and their employers will need to fill out a series of forms including UI19 and UI2.7 (completed by their employer); UI2.1 (completed by themselves), UI2.8 (completed by their bank). All of these are accessible online at https://www.ufiling.co.za/uif/. They will also need to provide a copy of their ID document and a letter from their employer confirming their reduction in work time or temporary lay-off.

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