South African businesses are now free to apply for COVID-19 loan guarantee scheme announced by President Cyril Ramaphosa last month. The scheme is part of government’s R500 billion rescue package meant to boost the economy and save jobs.
A joint statement by the National Treasury, SA Reserve Bank and the Banking Association of South Africa, said Absa, First National Bank, Investec, Mercantile Bank, Nedbank and Standard Bank were now ready to accept loan applications from embattled businesses which bank with the lenders.
The scheme is meant to assist distressed businesses who have an annual turnover of less than R300 million.
The three entities said it is envisioned that funds would be used by COVID-19 battered businesses to pay suppliers, salaries, rent and lease agreements.
“Government and commercial banks are sharing the risks of these loans. Initially, the National Treasury has provided a guarantee of R100 billion to this scheme, with the option to increase the guarantee to R200 billion if necessary and if the scheme is deemed successful,” the organisations said.
Ramaphosa last month said government would introduce a R200 billion loan-guarantee programme that will make it easier for banks to extend the much needed credit to businesses.
The scheme is expected to support more 700 000 businesses.
Enterprises across the board have been severely impacted by the outbreak of COVID-19 in March and the resultant lockdown that followed it.
The National Treasury last week said as many as 7 million jobs could be lost according to its worst case scenario modelling.
