Economic Relief Package for companies and employees
Two distinct economic relief packages have been announced by national government. One to support business and one to support employees directly. These are:
Package for Business
The package of economic relief measures to support affected businesses in Gauteng and KwaZulu-Natal was released today. The package is a joint initiative of R 3.75 billion from the Department of Trade, Industry and Competition (dtic), the Industrial Development Corporation (IDC), the National Empowerment Fund (NEF), the Small Enterprise Finance Agency (SEFA) and the Department of Small Business Development (DSBD).
The IDC has contributed more than R 1.5 billion which shall be channelled for support through:
- Business Recovery Fund: R 1.5 billion of loan funding at concessionary rates (0% for 12 months) is open for all affected businesses operating in IDC supported sectors up to a maximum of R 30 million per applicant. This is bridging finance support for businesses whilst awaiting insurance pay-outs and will cover short term operational losses.
- Business Recovery Fund Matching Grant: This R 100 million fund shall focus support on small businesses located in rural, townships and small-town areas, with a maximum of R10 million. The affected business’ needs can include the replacement of lost capacity, lost stock and the replacement of movable assets.
- Business Recovery Fund CSI Allocation: R 10 million has been made available for providing support for food security, re-building of school infrastructure, care and clinic infrastructure in rural and outlying areas. This fund will be administered by the IDC’s appointed NGO partners.
- MCEP Stabilisation Fund: A R 400 million contribution from the dtic which will be administered by the IDC. This is a revolving credit facility - with 24 months - at 0% interest with a maximum facility of R 50 million per applicant. This fund focuses on providing specific support for replacement stock in the distribution channel and retail warehouses, as well as working capital shortfalls.
The NEF has contributed R 250 million into the NEF Economic Recovery Fund, which shall focus support to businesses, that are not insured or which have an insurance shortfall, for: -
- Rebuilding, refitting and improvements to buildings and premises;
- Replacement of machinery and equipment; and
- Working capital shortfalls.
A maximum of R 10 million per applicant shall apply over a maximum of 60 months for loan funding and 12 months for bridging finance at 0% interest.
SEFA has contributed R 40 million which shall be split across: -
- Business Recovery Support: This is a blended finance mechanism offering 60% grant support and 40% loan funding with a maximum of R 2 million per applicant for uninsured small enterprises that require working capital and movable asset assistance.
- Informal Trader Support: which is a once-off grant of R 3000 for a maximum of 8 000 informal entrepreneurs to replace stock and inventory.
Applications are now open for affected businesses to apply to the relevant support fund.
Package for employees
The Minister of Employment and Labour has published a gazette bringing into effect a new relief scheme: The “Destroyed, Affected or Looted Workplaces: Temporary Financial Relief Scheme, 2021”
- The scheme is similar to the COVID-19 TERS scheme.
- The scheme is aimed at giving grants to workers who have lost income because their places of work are closed following the unrest in KZN and Gauteng that occurred between the 9th and 18th of July 2021.
- The grant, which is based on a sliding scale, is capped at R6 730, with a minimum benefit of R3 500.
- The scheme has no current end date and will be reviewed every two weeks by the Minister.
- The employer will apply on behalf of employees, but funds should be paid directly to an employee.
Cova Advisory