In the seven weeks since South Africa announced a national lockdown, businesses across the country embraced the challenge to adapt to a new reality.
Many businesses have moved their operations online, embraced e-commerce, and changed operating behaviours which will likely have a lasting impact long after the virus has been defeated.
And in many instances, businesses have prepared themselves to harness the opportunities that lie ahead.
We here at The Beancounter look forward to working with you the weeks and months ahead as we navigate this uncertain time, and prepared this mailer to help you adjust, and be fit for purpose post-Covid-19.
Here is what small businesses should take note of this week:
The Covid-19 Government-Guaranteed Loan Scheme
A number of South African commercial banks, who all form part of the Banking Association of South Africa, have partnered with the Reserve Bank and National Government to offer businesses a government-guaranteed loan scheme.
The scheme will allow qualifying businesses with an annual turnover of less than R300 million to apply for loans from their primary banks to cover some of their operational expenses for up to three months.
We highly recommend that you contact your primary business banker and inquire about how to apply for the loan, and whether your business is eligible, should your business be in need of such relief measures.
This government-guaranteed loan can be used for the below expenses:
a) Salaries and wages
b) Lease payments
c) Utilities
d) Insurance premiums
e) Supply chain costs
f) Other operational costs such as security, cash in transit services, cleaning and maintenance.
Businesses who qualify for the government-guaranteed loan are:
a) Any companies or businesses that are not state-owned, listed or companies with market funders.
b) Had an annual (group) turnover of less than R 300 million as of 29 February 2020.
c) Had an existing relationship with the bank they are applying from, and are in good standing with the bank as of 29 February 2020.
d) Be SARS registered.
e) Have no existing capacity to borrow.
f) Be in financial distress as a result of the national lockdown.
g) Haven’t already made an application with any other bank.
In short, the process to apply for the government-guaranteed loan is:
a) Apply for the loan. The partnering banks now all have online application processes available.
b) The bank will perform an eligibility and credit assessment.
c) If approved, the loan amount will be paid out over a maximum three month period. Interest, at the prime lending rate, will be charged from the first payout.
d) Loan repayment will commence from the seventh month, for up to 60 months. Early repayment is available and no penalties will be charged for early repayment.
The Beancounter Clients: Please contact your account manager if you require any assistance with the documentation required from your banker for the loan application. We will assist in ensuring you get the documentation you require for any relief fund applications.
UIF TERS Update
a) The Unemployment Insurance Fund (UIF) has not yet started accepting and processing applications for Covid-19 TERS relief for May. No official date has been given for when this month’s applications will be opened.
b) Foreign nationals have been required to pay UIF on any South African salaries or wages from March 2018. While the UIF initially declined TERS applications for foreign individuals, it now said it is in the process of verifying the foreign nationals’ details between itself and SARS to ensure payouts to these employees are also made.
c) Should your employees be working on a shift basis during the lockdown level 4 period, you will still be allowed to claim from the benefit for the days that the employees were not able to work due to the regulations. Should the lockdown level be relaxed to level 3, and employees are able to work for more days than that under lockdown level 4, you will be unable to claim for the days that they worked under the new lockdown restriction should it fall in May.
d) Finally, if you have claimed TERS funds, and these funds have been paid out to you as the employer, you are obligated to pay these funds to your employees. You cannot use the funds as a cash flow injection for your business.
The Beancounter Clients: We will continue to support you with regards to any TERS applications and submissions, and we encourage you to contact your account manager or our payroll team if you have any questions.
Until next week…
The Beancounter will remain actively involved in the weeks and months ahead to ensure that our clients have the most up to date and accurate information available to help them during this uncertain time.
As always, never hesitate to contact your account manager who will be able to assist you with any help you need. Together we will make it through this unprecedented time.