COVID-19 loan guarantee scheme to be expanded to help businesses restart

Finance Minister Tito Mboweni said this when he tabled the National Treasury’s Supplementary Budget Review to the National Assembly on Wednesday.

As the country has moved from a hard lockdown to advanced level three lockdown and most of the economy is opening up again, the COVID-19 loan guarantee scheme will be expanded to help businesses restart.

Finance Minister Tito Mboweni said this when he tabled the National Treasury's Supplementary Budget Review to the National Assembly on Wednesday. The budget was necessitated by President Cyril Ramaphosa's announcement that the government would spend R500 billion to support the economy's resuscitation following the outbreak of novel Coronavirus.

"…after a slow start, including all the detailed and technical legal preparations, the loan guarantee scheme is expanding rapidly. In its first month, the scheme lent over R10 billion. Many more applications are being processed, and lending is expected to rise significantly.

"Now that we have moved to an advanced level 3, most of the economy is 'open for business'," said the Minister.

He said it was imperative to help businesses get moving.

"The loan guarantee scheme also includes a business restart option, for businesses who need support to get up and going after the lockdown. This will apply to all businesses including those with a turnover of more than R300 million," the Minister said.

The Minister's announcement comes after government, as part of its COVID-19 relief package when lockdown started, announced a loan guarantee scheme aimed at providing a lending hand of up to R200 billion in government-guaranteed loans to small businesses with a turnover of less than R300 million to cover their operational expenses such as salaries, rent and utilities.

Addressing the National Assembly virtually on Wednesday, Mboweni said the government was also finalising amendments to the repayment holiday and turnover limit, and relaxing terms and conditions to support lending.

"The South African Reserve Bank and the commercial banks are finalising the revised legal arrangements and will make announcements shortly. Work is also continuing to expand the scheme to non‐bank lenders."

(With Inputs from South African Government Press Release)