Close Menu
Innovation Village | Technology, Product Reviews, Business
    Facebook X (Twitter) Instagram
    Monday, September 1
    • About us
      • Authors
    • Contact us
    • Privacy policy
    • Terms of use
    • Advertise
    • Newsletter
    • Post a Job
    • Partners
    Facebook X (Twitter) LinkedIn YouTube WhatsApp
    Innovation Village | Technology, Product Reviews, Business
    • Home
    • Innovation
      • Products
      • Technology
      • Internet of Things
    • Business
      • Agritech
      • Fintech
      • Healthtech
      • Investments
        • Cryptocurrency
      • People
      • Startups
      • Women In Tech
    • Media
      • Entertainment
      • Gaming
    • Reviews
      • Gadgets
      • Apps
      • How To
    • Giveaways
    • Jobs
    Innovation Village | Technology, Product Reviews, Business
    You are at:Home»Africa»SA Government Extends Covid-19 Loan Guarantee Scheme for SMEs by Another Three Months
    South Africa: Map

    SA Government Extends Covid-19 Loan Guarantee Scheme for SMEs by Another Three Months

    1
    By Tapiwa Matthew Mutisi on April 13, 2021 Africa, COVID-19, Funding, Government, Small Businesses, SMEs

    The National Treasury has announced that it will be extending the Loan Guarantee Scheme (LGS) by yet another three months as it aims to assist small businesses that have been financially impacted by the global pandemic. The LGS was announced by President Cyril Ramaphosa on 21 April 2020 as part of the government’s economic stimulus package and was designed to support small businesses that were experiencing financial distress as a result of the Covid-19 pandemic.

    The National Treasury of South Africa made the official announcement in a press statement on 12 April 2021.

    “After further consultation, the National Treasury, the South African Reserve Bank, and the BASA have agreed to extend the deadline by three months to 11 July 2021, and in the process to harmonise this deadline for all participating banks. The guarantee scheme will continue to service all loans advanced up to the extended date, for up to five years. The further extension of three months will enable an orderly winding down of the scheme and allow those businesses who have applications already lodged to be assessed.”

    The Covid-19 Loan Guarantee Scheme

    The Loan Guarantee Scheme was launched by the National Treasury, the South African Reserve Bank, and the Bank Association South Africa (BASA) on 12 May 2020. The scheme forms part of the Economic Stimulus Package. According to reports, to date, the scheme has distributed and approved 14 827 in loans to the value of R18.16-billion. 

    The total number of loan applications that have been received since the start of this year until 27 March 2021 is reportedly 1 787. Banks have approved 511 applicants and only 97 were taken up by clients. “The end of the Availability Period (the period for drawdown of loans) was 11 April 2021 for most participating banks under the guarantee scheme,” adds the National Treasury. 

    The National Treasury has admitted that the scheme has not been as effective in its implementation due to the hesitation by SMEs to incur further costs by taking out a loan. 

    “The LGS has not been as effective as originally envisaged, as many distressed companies have been reluctant to assume more liabilities (further loans) with little certainty of the length and severity of the economic impact of the COVID-19 pandemic. However, in addition to this guaranteed loan scheme, banks have also provided significantly more support to their small business customers via their own balance sheets, totalling at least R33 billion in payment relief, between April and November 2020.”

    Due to this, the demand for the Loan Guarantee Scheme dropped and banks have reportedly restructured loans and credit facilities worth billions for their clients facing financial distress due to Covid-19. 

    “The Financial Sector Conduct Authority (FSCA) has also provided further support to businesses and individuals by adjusting regulations to support insurance premium relief for policyholders, allowing them to claim while minimising disruptions to the expected income of intermediaries.”

    The National Treasury is focused on providing assistance to local businesses that have been negatively impacted by the pandemic and the economic downturn.

    “Existing support measures by the South African Reserve Bank and FSCA, as detailed in the 2021 Budget Review, will continue, subject to conditions and regulatory mandates. National Treasury, working with relevant stakeholders, continues to explore more appropriate support and risk-sharing mechanisms, including proposals related to non-bank financial institutions and development finance institutions, mindful of the fiscal challenges facing South Africa.”

    Related

    Coronavirus Pandemic Funding SMEs in Africa Government Loan Guarantee Scheme National Treasury of South Africa President Cyril Ramaphosa small businesses SMEs South Africa stimulus fund
    Share. Facebook Twitter Pinterest LinkedIn Email
    Tapiwa Matthew Mutisi
    • Facebook
    • X (Twitter)
    • LinkedIn

    Tapiwa Matthew Mutisi has been covering blockchain technology, intelligent technologies, cryptocurrency, cybersecurity, telecommunications technology, sustainability, autonomous vehicles, and other topics for Innovation Village since 2017. In the years since, he has published over 4,000 articles — a mix of breaking news, reviews, helpful how-tos, industry analysis, and more. | Open DM on Twitter @TapiwaMutisi

    Related Posts

    Roqqu becomes latest Nigerian crypto platform to support cNGN stablecoin

    Somalia launches e-visa platform to modernize travel and strengthen border security

    FG Hikes Nigerian Passport Fees to ₦100K and ₦200K Nationwide

    1 Comment

    1. Pingback: SA Fintech Startup Payflex Secures Undisclosed Amount of Funding | Innovation Village | Technology, Product Reviews, Business

    Leave A Reply Cancel Reply

    You must be logged in to post a comment.

    Copyright ©, 2013-2024 Innovation-Village.com. All Rights Reserved

    Type above and press Enter to search. Press Esc to cancel.