Covid-19 SME Relief: Everything You Need Know About Your Options

Covid-19 SME Relief: Everything You Need Know About Your Options

Government and private sector have launched interventions to support your business during the coronavirus outbreak.

On 22 April, President Cyril Ramaphosa announced a set of new coronavirus relief measures. These include a R2bn support package for SMEs and spaza shop owners, a R200 billion loan scheme with banks, and expanded tax relief.

The situation is evolving fast. To stay up to date we suggest you regularly check our FAQ page for breaking updates on coronavirus SME support.

On this page we provide a summary of the relief schemes available to your SMME, plus additional resources.

To view full details of the financial relief options available, all in one place, check out our Covid-19 funding and support options guide.

You’ll learn more about each fund, eligibility, application process and criteria.

Jump to the section for more detail:

Get UIF benefits

SMEs can apply to the Unemployment Insurance Fund’s COVID-TERS  benefit to cover salaries.

Type of support:

  • Employees are paid on a sliding scale between 38% to 60% of their salaries.
  • The lower the salary the higher the COVID-19 benefit.
  • Companies apply on behalf of employees.

Additional reading: Applying for Coronavirus UIF Benefits? Here’s Everything Your SME Needs to Know

Defer your tax payments

Another way to increase cash flow is to defer your provisional and PAYE payments.

Provisional tax

Type of support:

  1. You can pay 15% of your total estimated taxable income for the tax year for your first payment. This is due from 1 April 2020 to 30 September 2020.
  2. You can pay 15%  of your tax payment for the second provisional tax payment. This is due between 1 April 2020 and 31 March 2021.

PAYE

Type of support:

  • SMES can defer 35% of their PAYE liability, starting with the payment due on 7 May 2020 and ending with the payment due on 7 August 2020.
  • SMEs will need to pay the deferred tax liability to SARS in equal instalments over six months. The first payment must be made on 7 September 2020

Additional reading: COVID-19 Support for South African SMEs: Do you Qualify for Tax Relief?

Government funds

A range of government departments have introduced coronavirus funds.

Department of Small Business Development

The Department has two funds: the SMME Relief Scheme and the Business Growth Facility.

Debt/SMME Relief Scheme

The Department of Small Business Development’s SMME Relief Scheme aims to help businesses cover expenses during the outbreak.

Type of support:

  • Soft-loan facility for six months
  • You apply for funds to pay salaries, rent, buy raw materials or municipal accounts
  • It opened in April 2020

Business Growth/Resilience Facility

Type of support:

  • The facility covers funds for working capital, stock, bridging finance, purchase order finance, and capital equipment finance.
  • The interest rate is at prime less % pa.
  • Terms will depend on SME cash flow.

Additional reading: Coronavirus Support for South African SMEs: List of Government Funds

Department of Tourism

The Department of Tourism has allocated R200 million to its COVID-19 Tourism Relief Fund.

Type of support:

  • The COVID-19 Tourism Relief Fund is once-off grant funding, capped at R50,000 per entity.
  • Funding can be used for fixed costs, operational costs, and supplies.
  • This fund is open from 7 April to 30 May.

Department of Agriculture

The Department of Agriculture has established an Agriculture Disaster Support Fund for smallholder farmers.

Type of support:

  • Grant funding capped at R50,000 per farming operation
  • Funding can be used to complete current production cycle
  • This fund is open until 22 April.

For more information, see this press release on the Agriculture Disaster Support Fund.

Private funds

The Rupert and Oppenheimer families have each donated R1 billion rand to help South African SMEs. Because the Rupert fund is no longer accepting applications, we will focus on the Oppenheimer fund, the South Africa Future Trust.

Eligibility:

Here’s an overview of the criteria:

  • SMEs must be an existing client of the fund’s partner banks: Absa, Nedbank, FNB, Standard Bank, and Mercantile Bank.
  • Annual turnover must be below R25 million per year
  • SMEs must be trading for at least two years
  • Should demonstrate link between business distress and COVID-19

For more information, please visit the SAFT website

Additional resources on coronavirus funding and support for SMEs

Coping with COVID-19: Tips and Advice from a Business Coach

Coping with COVID-19: Tips and Advice from a Business Coach

This is a time of major uncertainty for business owners. We invited Charmaine Soobramoney, a personal development and business coach, to share her thoughts on some of the issues raised by our community. 

Charmaine has a diverse set of skills and experience. Her focus is on shaping, positioning and supporting individuals and organizations for excellence and growth.

Some of the topics we touched on in this interview are:

  • How to deal with anxiety about your business
  • What are ways to keep your staff motivated
  • How to have hard conversations with your staff
  • Could now be an opportunity for growth in any way?

Watch the full video here, and join our SA Small Businesses Unlocked community where you can engage with Charmaine directly if there’s any other questions you might have:

 

Applying for Coronavirus UIF Benefits? Here’s Everything Your SME Needs to Know

Applying for Coronavirus UIF Benefits? Here’s Everything Your SME Needs to Know

The Unemployment Insurance Fund has set aside R30 billion to help South African workers in distress due to the coronavirus.

If you’re a qualifying SME, your employees will get no less than R3,500 per month.

However, many business owners are struggling to access the relief.

More than 20,000 valid applications have been received, but only 136 have been processed, according to one news report. Business owners have taken to social media and newspaper columns to express their unhappiness with the process.

So, how do you access the UIF benefits for your business?

We spoke with Gerhard Papenfus, the Chief Executive of the National Employers Association of South Africa (NEASA), to gain a deeper understanding of the process.

Accessing the COVID-19 TERS benefits

The COVID-19 TERS (Temporary Employee Relief Scheme) is a relief package for employers, so you can pay staff salaries during the lockdown.

But a lack of clear information has been the biggest challenge SMEs face when trying to access the scheme, said Papenfus.

One part of the process includes completing a UIF Excel template. The employer must fill out their business details and each employee’s information. Before the document can be submitted, it must be converted to a CSV file. UIF Claims Commissioner Teboho Maruping told Moneyweb the bulk of applications for the relief were incomplete. Now, 23 000 employers will have to resubmit their applications.

To cover the information gap, NEASA, which represents 10,000 employers across South Africa, started publishing multiple updates to its website each day, releasing new information as it becomes available.

Papenpus explained that all employees who were “in employment on 27 March 2020 and who have suffered financial prejudice as a result of the lockdown” were eligible for the UIF benefits. This includes employees who are not South African citizens, provided they have a valid work permit.

The exact amount of the payments depended on their salaries.

“At this stage the benefit will be calculated on a sliding scale between 38% (for high earners) and 60% (for lower earners), calculated on the maximum salary cap of R17 712.00 per employee, per month.”

No worker will earn less than R3,500.

The process was different for SMEs with fewer than ten employees. For one, they do not need to sign a MOA.

“These funds will be paid out directly to the employees and not to the employer.”

However, these small businesses might struggle to recover advance payments, added Papenfus.

“UIF does not allow payment of the benefits to the employer where he employs 10 or less employees. Therefore, the employer cannot set-off these benefits against amounts advanced, which will make the employees hesitant to make advance payments in the first place.”

The UIF was set to make payments after 16 April, the date the lockdown was originally due to end.

“There will be payouts in tranches. Employers will have to apply for the first period of the initial lockdown and then again for the extended period.”

To speed up the process, the Department of Labour and the UIF launched an online platform, said Papenfus.

Looking forward, Papenfus encouraged business owners to think of life after the lockdown.

“If the employer envisages that reduction in staff or changes in conditions of employment will be required post lockdown, we advise to already start with this process during the lockdown period, as a section 189 process can be rather lengthy in nature.”

Frequently asked questions about the COVID-19 TERS benefit

NEASA has put together a COVID-19 TERS FAQ, based on the most common questions it has received from South African employers.

Here’s the summary of the key points.

Who can apply for the UIF’s COVID-19 TERS benefits?

SMEs need to be registered with the UIF to qualify. Your business doesn’t have to be in a complete shutdown for you to apply. Partial closures or any reductions in staff salaries due to COVID-19 are covered by the fund.

Which employees are eligible?

Any employee who was in employment on 27 March 2020 and who has suffered financial prejudice as a result of the lockdown. New employees who were set to start during the lockdown are also eligible.

How does COVID-19 TERS work?

Employees are paid on a sliding scale between 38% to 60% of their salaries. The lower the salary the higher the COVID-19 benefit. Companies apply on behalf of employees. No applications will be accepted once the lockdown is lifted.

How do I apply to COVID-19 TERS?

  1. Companies can email COVID19ters@labour.gov.za.
  2. You will receive an automated email response detailing the next steps in the process.
  3. Next, submit completed applications and supporting documents to Covid19UIF@labour.gov.za

Or, apply online on the UIF COVID-19 TERS Registration portal.

For more information, contact 012 337 1997.

Here is some of the information and paperwork you will need to to apply:

  • Letter of Authority, on an official company letterhead granting permission to an individual specified to lodge a claim on behalf of the company
  • MOA (completion of the agreement between UIF, Bargaining Council and Employer) · Prescribed template that will require critical information from the employer
  • Evidence/payroll as proof of last three months employee(s) salary(ies)
  • Confirmation of bank account details in the form of certified latest bank statement.

Will the scheme affect normal UIF benefits?

No, COVID-19 TERS benefits are not linked to normal benefits.

Do you need to send an invoice to the UIF?

No, this requirement has been removed.

How should employers register with a bargaining council claim? 

If you fall under a Bargaining Council, contact this organisation and find out whether or not they have finalised an agreement with the UIF. You may follow the relevant process with your Bargaining Council if they have reached an agreement with the UIF.

If no agreement has been concluded, or if one is still pending, you can claim directly from UIF on behalf of your employees.

What is included in remuneration for purposes of TERS? 

The amount an employee would normally earn and pay UIF on.

Can individuals claim TERS benefits? 

No, if an employer did not claim, the employee should ask them to claim. But if an employer still does not claim, the employees can claim normal UIF benefits for short-time or unemployment.

Where can I find more information on COVID-19 TERS?

For ongoing updates:

 

SA online retailer Granadilla Swim on adapting business during COVID-19

SA online retailer Granadilla Swim on adapting business during COVID-19

Joshua Meltz and Adam Duxbury have been running Granadilla Swim for the last five years, along with other businesses Rooftop on Bree and Sunn Kombucha. When news stories of the coronavirus and its impact on European countries like Italy and the UK started appearing, they knew they had to quickly find a way to adjust their strategy and keep afloat.

We chatted to the Cape Town based duo on how they adapted and used the power of community to transform their business during this time. Leveraging off their existing infrastructure, they’ve been able to pivot their offering to include delivery of groceries, coffee pods, olive oil and sourdough bread – with more to come. 

Here’s their story, with some pieces of advice for other South African retailers on how to adapt in the time of COVID-19.

 

Join our community

If you’d like to be a part of our next live chat or receive real time COVID-19 updates, join our SA Small Businesses Unlocked Facebook Group here.

Business High Five: Online hangouts for South African business owners

Business High Five: Online hangouts for South African business owners

The coronavirus lockdown is in full swing in South Africa. Some of us are still working remotely, whilst others are unable to work at all. It’s uncharted territory, and we’re all still working out how we make this time meaningful. 

Maybe you’re trying to set boundaries between your ‘home’ life and your ‘work’ life, which both play out in the same space at the moment. Maybe you’re trying to replace endless scrolling on social media with some meaningful content or channels for self-improvement. 

Here are five online platforms which may give you the value and experience you are looking for, while you’ve got the time.

Connect with community

The guys at Ideas Cartel are an innovative bunch. While COVID-19 might have halted their shared office space and hotel business, it hasn’t stopped them from offering support and resources to entrepreneurs. As a member of their Cartel Connect community you can access workshops, talks and classes which range from fitness to practical business skills. Membership costs R99 per month.

Stay up to date

The National Small Business Chamber (NSBC), a non profit organisation which offers support and networking opportunities to SMEs, has set up a dedicated COVID-19 online centre. Here you’ll be able to find content from the media relating to small businesses at this time as well as a notice board of upcoming webinars and events. 

Learn something new

Whether you are looking to sharpen your skills in a particular area or learn something new, there are loads of courses available online. Udemy has a range of educational courses for you to choose from – whether you want to learn how to play piano or build a website. There are even some discounts on some of their courses to make learning even more accessible over this period. Get Smarter also offers online short courses from credible universities and institutions. This is your chance to up your knowledge in areas like leadership and management or master specific skills ranging from topics like global health delivery to digital marketing analytics.  

Mentorship

Never trust a skinny chef… well there’s never been a better time to take some notes from the pros. Heavy Chef has been hosting workshops geared at entrepreneurial mentorship and knowledge sharing for years. They’ve now taken the magic online – you can live stream talks by industry leaders in South Africa from wherever you are. Innovation is the order of the day on their line up, and business owners get hefty discounts. 

Hang up your work hat

How do you decompress once you’ve sent that last email? Maintaining some kind of home/ life balance is important. If you’re missing the outdoors or even want an activity that you can include the whole family in, check out Wild Earth. This site gives you the opportunity to go on an online safari and interact with an actual game ranger. Who knew you’d be able to experience the African wilderness from behind your laptop?

Join our SA Small Businesses Unlocked community to get the latest COVID-19 updates, insights from other business owners and content to keep you sane over lockdown.