According to the Department of Small Business Development (DSBD), the Debt Relief Fund is aimed at providing relief on existing debts and repayments, to assist SMMEs during the period of the COVID-19 State of Disaster. For SMMEs to be eligible for assistance under the Debt Relief Fund, the applicant must demonstrate a direct link of the impact or potential impact of COVID-19 on the business operations.

The online application forms are now available, with instructions for applying set out below. It is important to note that only SMMEs that are registered on the database will be considered. Please go to https://smmesa.gov.za/ to register your business.

Objective: To benefit SMMEs that are negatively affected, directly or indirectly, due to the COVID-19 pandemic.

According to the DSBD details are as follows with the proviso that these may potentially change given the fluidity of the current situation.

This facility will fund the following: Soft loan funding that will keep the existing businesses afloat during the COVID-19 pandemic for 6 (six) months from April 2020.

Rationale for facility: The majority of SMMEs will experience a severe reduction in demand and subsequent reduction in revenues due to the COVID-19 pandemic. As a result, it is important to ensure that SMMEs do not close down completely and that they are supported with working capital to ensure that jobs are retained in the economy

Qualifying Criteria

• Businesses which are negatively affected due to the COVID-19 pandemic;
• The business must have been registered with CIPC by at least 28 February 2020;
• Company must be 100% owned by South African Citizens;
• Employees must be 70% South Africans;
• Priority will be given to businesses owned by Women, Youth and People with Disabilities;
• Be registered and compliant with SARS and UIF;
• Seda will assist micro-enterprises to comply and request for assistance must be emailed to debtrelief@seda.org.za;
• Whereas small and medium enterprises must ensure own compliance;
• Registration on the National SMME Database – https://smmesa.gov.za ;

Funding Requirements:

• Proof that the business is negatively affected by COVID-19 pandemic;
• Complete the simplified online application platform;
• Company Statutory Documents;
• FICA documents (e.g. Municipal accounts, letter from traditional authority);
• Certified ID Copies of Directors;
• 3 months Bank Statements;
• Latest Annual Financial Statements or Latest Management Accounts not older than three months from date of application – where applicable;
• Business Profile;
• 6 months Cash Flow Projections – where applicable;
• Copy of Lease Agreement or Proof ownership if applying for rental relief;
• If applying for payroll relief, details of employees – as registered with UIF and including banking details – will be required as payroll payments will be made directly to employees;
• SMME employers who are not compliant with UIF must register before applying for relief;
• Facility Statements of Other Funders;
• Detail breakdown on application of funds including salaries, rent etc.

Application Process:

• Register on https://smmesa.gov.za/
• Complete online Application Form;
• Upload Required Supporting Documents.

Please click here for the COVID-19 SMME Relief Common Template: http://www.sefa.org.za/Content/Docs/COVID-19_Finance_Relief_Application.pdf

Guidelines for Application: SMME Debt Relief Finance Scheme:

Click here for the Guidelines for Application:  Debt Relief Scheme

SMMEs are encouraged to make use of the alternative email at info@dsbd.gov.za or call the Hotline number 0860 663 7867.

Debt Relief Finance Scheme versus Business Growth/Resilience Facility

In terms of the distinction between the two support measures, the DSBD has indicated that the purpose of the Debt Relief Fund is strictly to assist small businesses that are experiencing financial challenges as a result of COVID-19.

Said differently, the Debt Relief Fund will not support SMME’s that were already in financial stress prior to the outbreak of COVID-19. In essence, the debt relief facility is a soft loan that will provide funding for existing businesses in distress due to the Coronavirus. The relief will be for a period of 6 months, effective 01 April 2020.

In an instance where SMME’s will require further assistance for longer than 6 months, the terms may be extended dependent on their needs. Separate and tailor-made facilities are being finalized for the informal sector, spaza shop and the self-employed. Further, DSBD noted that the priority will be given to businesses owned by females, the youth and persons with disabilities.

In turn, the Business Growth/Resilience Facility is targeted at SMME’s that are manufacturing what could be considered essential goods and in high demand in light of the COVID-10 pandemic; particularly hygiene and medical products, a portion of which are likely to have been imported prior to the pandemic outbreak. The DSBD will focus on SMME’s that produce these products within South Africa in a bid to ensure that manufacturing capabilities are able to increase production and output to meet the increase in local demand in order to curb and manage the spread of the COVID-19 virus.

This facility will offer working capital, stock, bridging finance, order finance and equipment finance. In this regard, the department is inviting or requesting information from SMMEs who manufacture or supply products as listed in the aforementioned National Treasury Instruction Note and those in logistics to enrol on the www.smmesa.gov.za  and apply for support from Tuesday, 24 March 2020. The funding amount will be based on the funding needs of the actual business. In terms of eligibility to qualify for funding, businesses need to meet government’s definitions of micro, small, and medium enterprises in South Africa, as published in the Government Gazette dated 19 March 2019. The turnover threshold for businesses to qualify for the funding depends on the sector in which they operate.

Key to the qualifying criteria for both the above-mentioned facilities is that the entities must be 100% South African owned, 70% of the employees must be South African, and the entities must be registered and be compliant with SARS. In the instance that an SMME is not compliant, they will be assisted with the compliance process before their applications will be considered.

Source: Content Agency