ANNOUNCEMENT 12 May 2020
On 21 April 2020, the government of South Africa announced launching a guarantee scheme for SMEs having financial difficulties due to the Coronavirus pandemic.
NUMBER OF INTERVENTIONS
The Presidency of South Africa, Statement by the President, “Statement by President Cyril Ramaphosa on further economic and social measures in response to the COVID-19 epidemic”. Available at: http://www.thepresidency.gov.za/speeches/statement-president-cyril-ramaphosa-further-economic-and-social-measures-response-covid-19
National Treasury of South Africa, Media statement, “Loan guarantee scheme opens”. Available at: http://www.treasury.gov.za/comm_media/press/2020/20200512%20Media%20statement%20-%20Loan%20guarantee%20scheme%20opens.pdf
National Treasury of South Africa, “Answering your questions about the COVID-19 loan guarantee scheme”. Available at: http://www.treasury.gov.za/comm_media/press/2020/COVID-19%20Loan%20Guarantee%20Scheme%20Q&A.pdf
National Treasury of South Africa, “COVID-19 Loan Scheme for SMEs”. Available at: http://www.treasury.gov.za/comm_media/press/2020/20200424%20Loan%20guarantee%20National%20Treasury.pdf
The government of South Africa, Media Statements, “Treasury on Coronavirus COVID-19 Loan Guarantee Scheme”. Available at: https://www.gov.za/speeches/treasury-coronavirus-covid-19-loan-guarantee-scheme-26-jul-2020-0000
On 21 April 2020, the government of South Africa announced some economic and social measures in response to the COVID-19 pandemic. One of the measures was the introduction COVID-19 loan guarantee scheme. The loan guarantee scheme targeted SMEs facing a significant loss of income due to the Coronavirus pandemic and aimed at supporting the operational expenses of SMEs including salaries, rent, utilities, and ordinary-course supplier payments.
Concerning the budget of the scheme the President of South Africa Cyril Ramaphosa said: “We will therefore be introducing a R200 billion (USD 10.5 billion) loan guarantee scheme in partnership with the major banks, the National Treasury and the South African Reserve Bank.”
The treasury initially provided a R100 billion (USD 5.3 billion) guarantee to participating banks, but this amount is said to be increased to R200 billion when required.
On 26 July 2020, the government has made it easier to access COVID-19 loan guarantee scheme. More specifically, bank credit assessments and loan approvals have become more discretionary and less restrictive, loans can be accessed over a longer period, the interest and capital repayment holiday have been extended, the turnover cap has been replaced with a maximum loan amount of R100 million, and the test for good standing has been made easier.