UASA welcomes the activation yesterday of the multi-billion loan guarantee scheme announced by Pres. Cyril Ramaphosa last month.
We understand that operational expenses like rent, salaries and paying supplier invoices are a constant drain on companies’ income, and even more so now during the Covid-19 restrictions on business and these loans are intended to assist in covering those costs specifically. The loan guarantee scheme means there will be fewer companies considering staff retrenchments and will therefore help save many desperately needed jobs.
UASA is pleased to see that government is working fast to assist businesses affected by the lockdown in collaboration with the South African Reserve Bank and South Africa’s major commercial banks. The following rules apply for loan applicants:
- · Eligible businesses who are financially distressed due to COVID-19 and the lockdown, with annual turnover of under R300million and are registered with SARS can apply at their retail banks if they were in good standing with their bank prior to Covid-19.
- · Applications will undergo a normal credit eligibility vetting process.
- · Business owners may be required to sign surety.
The loans have up to a six-month payment holiday built in, but interest and charges will accrue as from loan initiation date and the lending rate will track the repo rate plus 3.5%, repayable over 5 years
Whilst UASA is inclined to remind business owners to always be cautious when incurring debt, the preferential lending rate, payment holiday and terms and conditions, when part of a strategic plan by business owners to resuscitate their business and save jobs, can work in their favour when handled wisely.
For further enquiries or to set up a personal interview, contact Stanford Mazhindu at 074 978 3415.