After receiving over 35 000 applications, the Department of Small Business Development (DSBD) have announced that they have closed the first window for businesses to apply for relief during the COVID-19 pandemic.
The window officially shuts on Saturday 23 May, and a new process will begin in which businesses that weren’t assisted in the initial window will have to navigate another avenue to procure support from the department.
Going forward, the department said that they have partnered with the Unemployment Insurance Fund (UIF) to ensure that businesses that did not qualify during the initial window will receive relief provided they agree to an acknowledgement of debt as well as payment terms.
The distribution of relief funds has been a controversial process, with many bemoaning the need for businesses to be BEE compliant in order to qualify, and this is partly to blame for the fact that of the 35 855 applications, only 14 451 were deemed “complete”, and of those, only 1 497 applications were approved to the value of worth R513 million.
The fund has at it’s disposal R500 million, after the initial R200 million was bolstered due to a shift in strategy when the department instigated the Business Growth and Resilience Facility.
This has nonetheless left an enormous funding gap, which the department said they will engage with the National Treasury about amending.
According to the Small Enterprise Financing Agency (Sefa) assessment, the balance of the 12 954 complete applications require an estimated budget of R4.4 billion, but a bulk of the applications require assistance with payment of salaries to the total value of R3.6 billion.
They said that of the successful applicants, R800 million in funding allocated could be recouped by the businesses should they be able to go back to work as is planned during the shift to Level 3 lockdown measures, and as a result the department will try and mitigate the funding gap by accelerating this process and assisting them to get back to work instead.
The Debt Relief Financing Scheme was mandated to ensure the provision of working capital to assist businesses during the period when economic activity was negatively affected due to the COVID-19. It did so by applying payroll assistance, rental assistance and assistance with the payment of utilities attached to businesses.
The new scheme will take effect following the closing of the initial window, and those who have applied unsuccessfully will not need to reapply as the department tries to mitigate the shortfall.
“The DSBD has entered into agreement with the UIF to ensure that SMMEs that previously did not qualify due to non-compliance can be covered by the UIF provided they agree to an acknowledgement of debt as well as payment terms with the UIF,” the department said on Friday 22 May.
“Furthermore, this agreement ensures that SMMEs that had already applied for payroll assistance through the SMME Debt Relief Finance Scheme do not need to re-apply with the UIF but their applications will be forwarded directly to the UIF.”
The department said that it would publish a comprehensive list of all the businesses that had been supported, with a breakdown of the demographic spread of funding.
“Our commitment is that small businesses are the cornerstone of the economy of South Africa and their success is tied to the economic revival of our economy,” they said.