Priority Notice – COVID-19 Funding Instruments for Businesses

Please take note of the different government and funding instruments available. One of our professional bodies (SAIT) has provided us with the list and details below.

  1. Agro-processing Support Scheme
  • The objective of the APSS is to stimulate investment by South African Agro-processing/beneficiation (agri-business) enterprises.
  • Administered by the DTI
  • Maximum funding –R20 million per entity
  • 20 to 30% grant on capital costs
  • Qualifying Criteria
    • Be a registered legal entity
    • Possess a tax clearance certificate
    • Be involved in starting a new Agro-processing operation or in expanding or upgrading an existing Agro-processing operation
    • Submit a valid B-BBEE certificate (minimum level 4)
    • Purchase 30% of supplies from black owned farmers
    • http://www.thedti.gov.za/financial_assistance/financial_assistance.jsp
  1. Black Industrialist Scheme
  • The Black Industrialist Scheme (BIS) incentive offers a grant on a cost sharing basis.
  • Administered by the dti
  • Maximum funding –R50 million per entity
  • 30 to 50% on mainly capital costs –not acquisitions
  • Qualifying Criteria
    • Be a registered legal entity in South Africa
    • Be aligned to the productive sectors of the economy within the identified sectors
    • The applicant must have greater than fifty percent (>50%) shareholding and management control
    • The applicant must be directly involved in the day-to-day running of the operation and must have requisite expertise in the sector.
    • http://www.thedti.gov.za/financial_assistance/BIS.jsp
  1. Procurement from Government
  • Government has prioritised securing essential goods and services from all critical stakeholders nationally
  • http://www.dsbd.gov.za/wp-content/uploads/2020/03/Request-for-ProposalsNone-Food-Supplies.pdf
  • The Department of Small Business Development (“DSBD”) is implementing measures to support small businesses that manufacture critical products such as hygiene, medical goods, food items and related support services businesses.
  • Register on smmesa.gov.za
  • The essential goods and services that have identified are required for the South African public including state owned hospitals, clinics, schools and essential place to
  • Reduce the transmission of Covid 19
  • Protect the health of the public, vulnerable members of the society and employees of health institutions
  • Ensure that there is adequate of these products to pharmacies, hospitals and key sectors
  • Qualifying small businesses are encouraged to submit proposals to the DBSD between 27 March 2020 and 30 April 2020 email to – criticalsuppliers@dsbd.gov.za
  1. IDC MCEP Loan COVID Essential Product Manufacturers
  • Administered by the Industrial Development Corporation –from DTIC
  • For working capital and plant & equipment requirements
  • Fund Value –R300 million • Maximum funding –R30 million per entity
  • Cost of finance
    • Priced at a fixed rate of 2.5% per annum
    • Maximum term is 48 months, including moratorium
  • Qualifying Criteria
  1. IDC COVID 19 FUND COVID Essential Product Manufacturers & Suppliers
  • Administered by the Industrial Development Corporation
  • Short term loan for once-off contract finance or import funding, revolving credit, guarantees for imports
  • Cost of finance
    • Loans priced at prime + 1 % per annum
    • Guarantees 2% per annum
    • Maximum term is 3months, including moratorium
  • Qualifying Criteria
    • Track record in manufacture or supply of comparable product –ability to deliver
    • Company should show profitability prior to application
    • Company to be registered as a vendor with Government, Multinationals or retailers
    • Be a registered legal entity in South Africa
    • Company that has been operational for at least a year
    • Company must have a valid contract/purchase order or letter of intent
    • Companies with BBBEE Level 4 will be encouraged
  1. Tourism Fund
  • Administered by Department of Tourism
  • Assist SMMEs in the tourism and hospitality sector who are under particular stress due to the Covid 19 travel restrictions.
  • Fund Value –R200 million
  • Maximum grant: unsure
  • Qualifying Criteria
  1. Debt Relief Finance Scheme
  • Administered by Department of Small Business Development
  • To benefit businesses that are negatively affected, directly or indirectly, due to the Coronavirus pandemic to mitigate against job losses and the expected harsh economic impact.
  • Fund Value – R500 000 000
  • Qualifying Criteria
    • Registered with CIPC by at least 28 February 2020
    • Company must be 100% owned by South African Citizens
    • Employees must be 70% South Africans
    • Priority will be given to businesses owned by Women,  Youth and People with Disabilities
    • Applicants must demonstrate direct link of impact or potential impact of Covid-19
    • Complete online Application Form (to be released on Thursday, 02 April 2020)
    • https://www.mybindu.org.za/
  1. Business Growth/Resilience Facility
  • Administered by Department of Small Business Development
  • For businesses geared to take advantage of supply opportunities resulting from the Coronavirus pandemic or shortage of goods in the local market.
  • Fund Value –R500 000 000
  • Qualifying Criteria
    • Registered with CIPC by at least 28 February 2020
    • Company must be 100% owned by South African Citizens
    • Employees must be 70% South Africans
    • Priority will be given to businesses owned by Women,  Youth and People with Disabilities
    • Applicants must demonstrate direct link of impact or potential impact of Covid-19
    • Complete online Application Form (to be released on Thursday, 02 April 2020)
  1. NEF Loan
  • Administered by the National Empowerment Fund
  • R200million from the DTIC
  • For black business to purchase machinery, raw materials and other items
  • Fund Value – Loans between R500 000 – R10 000 000
  • Cost of finance
  • Offered at 0% interest in year 1 and fixed at 2.5% thereafter
  • Qualifying Criteria
    • Must produce hand sanitisers, disinfectants, hand soaps, facial masks, gloves, medical protective clothing and steel beds, maize meal, flour, beans, cooking oil among other items
    • Must be registered supplier for retailers or institutions that have agreed to purchase the manufactured products
    • Tax compliance and commercial viability is a pre-requisite
    • https://www.nefcorp.co.za/covid-19-business-funding/
  1. COVID-19 SME FUND
  • Administered by Business Partners (Rupert Foundation & Remgro)
  • For working capital (Salaries, rent, HPs, Loan installments)
  • Fund Size R900mil (R100mil for Sole Prop & Partnerships administered by PWC)
  • Transaction Value – Loans between R250 000 – R1 000 000
  • Cost of finance
    • M1 –M12 0%, payment holiday for first 12 months, no early payment implications
    • M12 -M60 Prime interest, no early payment implications
    • Monthly disbursements
  • Qualifying Criteria
    • Feb 2019 AFS signed (non negotiable)
    • Fully compliant entity
    • Formal registered entity
    • Ownership does not have to be SA Citizens
    • Excludes: Direct agriculture, non-profit organisations, Underground mining, Onlending
  1. Auto Fund
  • Fund Value –R6 Billion
  • The guidelines have not yet been finalised
  1. SAFT – SA Future Trust
  • Support to SMME employees at risk of losing their jobs or who will suffer loss of income due to COVID
  • Fund Size: Openheimer R1bil relief fund
  • Annual turnover below R25mil
  • Trading for min 24 months
  • Sustainable business on 29 February 2020
  • 5year 0% interest free loan
  • Must be an ABSA, FNB, Nedbank or Standard Bank client

REGISTRATION IS DIRECTLY WITH YOUR BANK

https://opp-gen.com/saft/#eligibility

Way forward

  • New way of working for government and private sector –speed versus bureaucracy;
  • Expect changes and new funds to be launched;
  • Expect the rules to be unclear, even to people administering the programmes;

Kind regards

Team LEAD