(Derived from Accounting Weekly)
The government has made R200 billion available to fund your business's salaries, rent, and suppliers for the next three months. You can now apply directly at all major banks.
Accountants will be required to assist clients in preparing the financial statements and other paperwork required by the banks.
Please bear in mind these are loans that require no repayment in the first 6 months but repayable within 66 months at the prime interest rate.
The loans may only be used for operational expenses such as salaries, rent and lease agreements, contracts with suppliers, utilities, etc., for a period of three months. The loans may not be used for other purposes, such as paying dividends.
Requirements for loan applicants
Companies applying for the Covid-19 SME loan schemes must:
Have an annual turnover of R300 million or less measured at a group level
Be in good standing with the bank as at 29 February 2020
Be registered with the South African Revenue Service (Sars)
Have been negatively impacted by the Covid-19 lockdown and the resultant slowdown in the economy
Have no existing capacity to borrow in order to alleviate financial distress. This means that you do not have an existing overdraft facilities and/or other general short-term banking facilities that you can use for working capital purposes
Are in a state of financial distress due to being negatively impacted by the Covid-19 lockdown and the resultant slowdown in the economy
Are a company, statutory body corporate, close corporation, sole proprietorship, trust or partnership, association, joint venture or any similar entity, but excludes state-owned entities, listed companies and companies with capital market funders or funding instruments.
The conditions applicable to the loans are:
Loans are available for business operational expenses such as salaries, rent and lease agreements, contracts with suppliers, utilities, etc. for a period of three (3) months
Approval of applications for qualifying businesses are subject to the Bank’s risk-evaluation and credit-application processes. The bank holds the right to decline an application based on its assessment
A business can only apply for one Covid-19 loan from one bank
These loans will be offered at prime interest rate
The loan repayment period is 66 months, with the first 6-months being a payment holiday; at the end of month 7, businesses will be expected to start repaying the loan over the next 60 months (5 years)
Interest will accumulate from the date on which the first drawdown on the loan occurs
No additional administration and/or initiation fee will be charged for these loans.
Standard Bank: For more information on Standard Bank’s Covid-19 loan scheme, click here.
Nedbank’s loan scheme application form and conditions can be found here.
Absa’s financial relief schemes can be found here.
FNB’s financial relief schemes are available here.
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