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South Africa launches ‘bounce back’ finance scheme – how to apply


The National Treasury has announced the commencement of the Bounce Bank Support Scheme aimed at providing additional funding to qualifying businesses in order to grow the South African economy and to facilitate job creation.

The scheme was first signalled in Finance Minister Enoch Godongwana’s Budget Speech in February.

In a statement on Tuesday, Treasury said the Scheme is expected to facilitate the recovery and bounce back of businesses beyond the Covid-19 pandemic lockdowns.

“The scheme will also help those businesses recovering from the July 2021 civil unrest in KwaZulu-Natal and Gauteng, as well as the current ongoing flood-related disaster. In June 2020, the Covid-19 Loan Guarantee Scheme was established to help ease financial pressures experienced by qualifying businesses negatively affected by low economic activity following lockdown restrictions to reduce the spread of Covid-19.

“The guarantee scheme formed part of a package of regulatory and direct support measures which provided significant financial support and helped preserve many jobs and kept businesses afloat.”

The Bounce Back Support Scheme benefits from lessons learnt from the 2020 Loan Guarantee Scheme to provide for greater take-up including development finance institutions (DFIs) and non-bank small and medium enterprise (SME) finance providers.

The Bounce Back Support Scheme comprises a loan guarantee mechanism of R15 billion and a smaller equity linked scheme which will be facilitated by National Treasury and DFIs. The smaller equity linked scheme will be introduced later in the year as a complementary tool of R5 billion.

How to apply

Accessing the Bounce Back Support Scheme loans will be accessible through participating banks.

“Access for DFIs and non-bank SME finance providers to the Bounce Back Support Scheme will be facilitated through participating banks, and such participating banks will still have to perform due diligence in accordance with regulatory standards.

“Access to the equity-linked tool is expected to be introduced later this year and more details will be communicated once they are finalised.”

Scheme loans are to be granted at a preferential capped rate (repo plus 6.5%). Government and lenders (participating banks, DFIs and non-bank SME finance providers) are sharing the risk of non-repayment of these loans with the government taking the first 20.5% of losses.

The Treasury added that businesses will be required to repay the loan over a period of up to five years after any deferred interest period agreed to by the lenders.

It said loans could have rescheduling options at the discretion of the lenders (pay as you grow), for up to a period of 10 years from the first drawdown in the event of businesses being initially unable to pay any repayment due.

Eligibility

Businesses with a maximum turnover of R100 million per annum will be eligible to access the scheme. The maximum loan amount will be set at R10 million per business (and a minimum loan amount of R10,000).

“In the case of small and medium enterprises, the turnover cap is a maximum turnover of R100 million with a maximum loan amount of R10 million whilst for non-bank lenders, loans may be made for a maximum amount of R100 million per non-bank lender subject to the approval of the lender.

“Eligible businesses should contact their primary or main banker for further information on the scheme and the qualifying criteria,” read the statement.


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