Struggling businesses can now apply for COVID-19 business loans in South Africa, according to the Treasury.
During President Ramaphosa’s address to the nation regarding financial support, it was made clear that R200 billion will be made available to much-needed aid for South African businesses.
The coronavirus loan scheme for businesses has been collectively developed by Treasury, the South African Reserve Bank and a number of commercial banks in the country.
However, it’s extremely important for the details of this loan scheme to made clear to all business owners who are thinking of applying.
Here are some details of how the funding will be made available:
Treasury has defined the principle of this loan scheme as collaborative, ultimately meaning that profits and losses are shared between the banks and the South African Government.
The scheme will receive the difference between the rate at which the banks lend the money, together with limited costs.
According to Treasury, “this will include a guarantee fee charged to the banks in relation to the scheme. These profits will be used to offset any losses that the scheme makes.”
Furthermore, if the scheme incurs additional losses, these will be absorbed by the participating banks, although capped at 6% of the size of the loan. Any further losses will be covered by the fiscus.
COVID-19 business loans in South Africa aim to provide much-needed financial aid in the wake of the global pandemic.
However, it’s crucial to understand the terms and conditions of these loans, as well as what makes a business eligible.
For more information regarding this loan scheme, or for legal assistance with understanding the fine print, please don’t hesitate to contact our attorneys.
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