Coronavirus COVID-19: Advice for South African SMEs

Coronavirus COVID-19: Advice for South African SMEs

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COVID-19 is hurting businesses, thrusting South African SMEs into an uncertain future. If you’re a business owner, it’s hard to keep track of all the information around the outbreak and how it impacts your SME.

To help you stay updated with the latest developments, we’ve pulled together SME resources from government and business support organisations.

We’ll be updating this page regularly with new resources for SMES.

 

Request a callback from our Funding Specialists

 

Latest updates: South Africa has now moved into Lockdown Level 1 as of 1 March 2021. We see a return in the ban of alcohol sales and onsite consumption, restrictions on gatherings, and a curfew from 24h00 to 04h00 daily. Jump here for the full level 1 guide. 

Jump to a specific section to learn more:

General COVID-19 advice

On 15 March, President Cyril Ramaphosa declared the COVID-19 outbreak a national state of disaster. (Full statement here.) A week later, the President announced a 21-day lockdown, effective from 26 March.

To further curb the spread of the coronavirus, President Ramaphosa announced the lockdown would be extended until the end of April. You can read the President’s full address here.

On 23 April, President Ramaphosa said once the full lockdown was lifted, there would be a “gradual and phased recovery of economic activity”.

During this time, South Africa will adopt a phased alert system based on the infection rate.

This means some businesses will be able to start operating under “specific conditions”. One of these measures is the return of staff in batches of one-third.

For the latest information from the government, visit the South African Government’s website.

The National Department of Health has set up a COVID-19 resource portal.

The site includes:

  • Latest press releases from the Health Ministry
  • COVID-19 prevention tips
  • Social distancing guidelines

In addition, the National Institute for Communicable Diseases issues regular updates on new cases here.

COVID-19 Lock down levels and South African SMEs: Impact on trading

On 15 August, President Ramphosa announced that the country will be moving to Alert Level 2 on 18 August 2020, which allows even more businesses to operate.

For an overview about trading during level 2, please see our guide.

During level 2, in addition to those business activities previously allowed under Level 3 restrictions, the following business activities are now permitted:

  • All accommodation establishments, including hotels, BnB’s and homeshares, such as Airbnb
  • Bars, Taverns and Restaurants for sit-down meals and on-site alcohol consumption
  • Fitness centres, gyms and health/wellness spas
  • Inter-provincial travel for business and leisure
  • Alcohol and tobacco product sales

“In each instance, specific and stringent safety requirements have been agreed on and will need to be put in place before a business can re-open, and protocols will need to be strictly adhered to for businesses to remain open,” said Ramaphosa.

The government will announce more detail on the re-opening of these businesses.

Essential Services

Here is a list of what the government regulations define as essential services:

If your SME falls into this category, you need to apply for an essential services certificate from the Companies and Intellectual Property Commission. You can apply for a certificate from CIPC’s Bizportal website here.

Government support for South African SMEs during the coronavirus outbreak

A package of support programmes will help SMEs during the shutdown, announced President Ramaphosa.

On 21 April, President Ramaphosa revealed a R500 billion coronavirus relief package.

SME initiatives include:

  • R2 billion support package for SMEs and spaza shops (more detail to be released)
  • R200 billion loan scheme with banks (more details set to be released)
  • Expanded tax relief

Below, we provide a broad overview of the key government support.

The Department of Small Business Development set up an SME Support Intervention to help SME owners who are struggling to survive. The department released the news on Facebook, and you can view the full statement here.

Here is an overview of the Department of Small Business Development’s funds:

Two key funds are:

  • SMME Debt Relief Scheme
  • Business Growth and Resilience Facility

In a press briefing, government announced qualifying businesses must meet the following criteria:

  • 100% South African-owned
  • 70% of employees must be South African

The Department of Small Business is aiming for a 14-day turnaround to release funds. You can watch the full briefing here.

The department has released application guidelines and more detailed criteria, including the type of documents you need when you apply. You can find the guidelines here.

To access funding, follow these steps:

  • Register on www.smmesa.gov.za
  • Complete the application forms. You can download the forms from the same site: http://www.smmesa.gov.za/
  • Upload the supporting documentation
  •  At this stage, applications must be emailed
FundsSupporting documents Key contacts
Debt relief finance scheme Company statutory Documents;
FICA documents (e.g. municipal accounts)
Certified ID copies of Directors;
3 months bank statements;
Latest annual financial statements / Latest management accounts;
Business profile;
6 months cash flow projections (where applicable);
Copy of lease agreement or proof of ownership if applying for rental relief
Employee details (bank details and UIF) for help paying salaries
debtrelief@seda.org.za
Business Growth and Resilience Facility CIPC registration documents;
FICA documents (e.g. municipal accounts);
ID Copies of directors/ members;
3 months bank statements;
Latest annual financial statements /management accounts;
Business profile;
6 months cash flow projections (where applicable);
Industry certification (where applicable);
Estimations for funding requested
growthfund@seda.org.za
COVID-19 TERSLetter of authority: letter on a company letterhead giving an individual permission to lodge claim
Agreement between the employer, bargaining council, and UIF
Template from the UIF with relevant information from employer
Last three months payroll
Certified latest bank statements
012 337 1997 /covid19ters@labour.gov.za

In addition, the government has published Request for Proposals to get more information from South African-owned SMEs that participate in medical supplies and other essential goods. The goal is to get more of these businesses involved in manufacturing the goods. 

If you are a textile or clothing manufacturer, you could help produce cloth face masks. All South African-owned SMEs can apply for this COVID-19 SME opportunity. Masks must be 100% locally manufactured. The deadline to provide your business information is 30 April.

Keep the following information on hand hen you submit your information:

  • CIPC incorporation documents
  • Statutory document
  • FICA documents
  • ID Copies
  • Proof of bank account
  • Business profile

On April 5, SEDA announced a survey to better understand the impact of COVID-19 on SMEs. The agency plans to use the survey findings to improve support for SMEs. Take the survey here.

If you want more information on these support measures, you may want to read these blog posts:

Private sector support for SMEs

Business support organisations, like the South Africa Small Business Institute, have warned that the outbreak could cripple SMEs.

In response, a range of interventions to support SMEs have been announced.

The Oppenheiemer family set up the South Africa Future Trust, seeding the funds with a R1 billion pledge. Businesses can apply for interest-free loans from the fund. A key goal of this fund is support SMMEs to pay staff salaries. Businesses can apply for the loan from their banks. You will need to attach a list of employees at risk because of the coronavirus.

Other resources include:

The cost of business funding

COVID-19 has created a challenging economic environment. In response, the South African Reserve Bank has cut the repo rate, bringing down the cost of debt.

On 14 April, the South African Reserve Bank announced that the Monetary Policy Committee had dropped the repo rate by 100 basis points.

This comes after a 100 basis point cut on 19 March.

On Thursday (19 March 2020), the South African Bank announced that the Monetary Policy Committee had dropped the repo rate by 100 basis points.

Lesetja Kganyago, Governor of the South African Reserve Bank, said the coronavirus would “negatively affect global and domestic economic growth through the first half of 2020”.

“Monetary policy can ease financial conditions and improve the resilience of households and firms to the short-term economic implications of Covid-19.”

Here’s a copy of the full statement.

Will Lulalend still provide business funding during the coronavirus outbreak?

Your business matters to us. Supporting you to succeed has always been our mission. That hasn’t changed.

We’ll continue to make it easy for you to access business funding.

Because we’re a technology company, you can still apply online in minutes and get your funding in 24 hours. And, remember, if you’re on our credit facility, the process is even faster because you don’t need to reapply.

Can I qualify for funding if my industry is affected by the coronavirus?

Over the past few weeks, we’ve been speaking with SMEs about the impact of the coronavirus. Some industries, like tourism, are being hit hard. But, we’re not excluding any businesses based solely on industry.

Instead, we’ll continue to use the proprietary technology we’ve built especially for assessing SME’s, combined with any risks due to coronavirus.

What if my business is affected by the coronavirus?

This is a difficult time for businesses and things are changing fast. If you realise you’re going to struggle to make your repayments, contact us as soon as possible. Together, we can find a solution.

We’re here for you and will continue to do all we can to help you.

What should I do if I have more questions?

Reach out to your account manager or contact us anytime via:

Phone: 087 943 2381 / 021 201 1550

Email: support@lulalend.co.za

Or, join our private Facebook group, SA Small Business Unlocked, where South African SMEs connect and support each other.

Crucial business tips for the Easter holidays

Crucial business tips for the Easter holidays

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Easter is more than just a weekend devoted to gorging on chocolate shaped bunnies and eggs. Depending on what industry you’re in – you’re either in a frenzy to get staff and inventory sorted for a busy period, or preparing for some well-deserved time off over the long weekend. And with the Easter holidays not coinciding with the school holidays there is more  to consider this year. Preparation is key in either case, and that’s why we’ve put together some essential tips to get your business ready for the Easter weekend.

 

Try Easter incentives for customers

Across a variety of SME industries, purchases can be incentivised by adding small festive extras; It could be as simple as adding a little Easter Egg with each purchase, an Easter special offer, a free hot cross bun with every meal or coffee order, or taking a gold coin to guess how many Easter eggs are in a jar. Get festive, and have fun with it.

Get the word out

It’s important to keep your customer base informed of your availability over the holiday weekend. This is especially important for SMEs in the hospitality industry. While some cafes and restaurants will be closed, it’s important to get the word out if you’re staying open – if you hope to take advantage of the reduced competition. Jump on Facebook or Instagram to make a social post, update Google My Business with the ‘Special Hours’ feature to reach those searching for a place that’s open, or if you’re in brick and mortar retail and hospitality; you can get creative with a sandwich board out front to let customers know you’re in business.

 

Stay on top of your finances

For those SMEs keeping busy over Easter, it can be difficult to source the funding required to employ staff on holiday rates, improve shop displays, and cover the cost of extra stock. For those taking the time off, you’ll still have to keep on top of invoices and pay wages for the time you aren’t receiving income. In either scenario, cashflow is key, and getting access to the funds you need is simple and easy with Lulalend. Contact us for a free quote, with no paperwork required. You’ll receive an instant decision on how much you qualify for. Access up to R1 million in 24 hours and make sure you’re Easter ready.

 Click here to apply online

 

Lulalend Credit Facility FAQ’s

Lulalend Credit Facility FAQ’s

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What is a credit facility?

This is a facility that gives your business access to a line of credit which allows you to draw down on available funds without us needing to do an assessment on your business each time.

 

What are the benefits of the facility?

 

  • Access to funds whenever you need them
  • Only ever pay for the funds you draw down
  • Settle early and save on future months costs

 

How long is my credit facility available for?

As long as you continue to trade well, the facility is available to you. Please note that you will need to remain linked via your online banking account or online accounting profile (Sage or Xero) to avoid placing your facility on hold.

 

How do I drawdown on my facility?

Log onto your Lulalend profile and go to the Credit Facility tab. You will see the available amount that you are able to draw down. Select the amount and click “Withdraw now”. You will then be presented with a legal agreement to sign online.

 

What happens to my repayment profile each time I draw down?

Each draw down cancels out the existing repayment profile and puts you on a new payment profile based on the total capital outstanding after the draw down.

 

When can and can’t I draw down on my facility?

You are allowed to draw down at any time, other than:

  • when you are in arrears on any Lulalend product.
  • when the Facility is placed on hold.

 

How much does it cost to have a credit facility?

It will not cost anything to have a credit facility product. You only ever pay for the funds you use.

 

What would my instalment and costs be for the facility?

Every month you pay back 1/6th of the total advanced amount plus the monthly cost. For the first 2 months, monthly costs are 2% – 6% of the capital amount drawn down and 2% for each of the remaining 4 months.

 

How do I increase my facility amount?

Log onto your Lulalend profile and go to the Credit Facility tab. You will see a red circle with an arrow next to Credit Facility Limit amount. You need to click on the Arrow and fill in the amount you would like to increase to.

 

My credit facility is on-hold, what does that mean?

This will occur when the system requires further information which has been flagged for review. A credit analyst will be in touch with you for more information if required.

 

4 solutions for taking control of your cash flow

4 solutions for taking control of your cash flow

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For any small business cash flow is pretty important. A study from the financial services company U.S. Bank found that about 82% of startups and small businesses fail due to poor cash flow management. No one can run a business without having a firm grip on their cash flow.

One of the biggest problems is getting paid on time and not having to chase clients for payments. You know how it goes, you send an invoice and nothing happens. You send a reminder, still nothing. Eventually, a manual EFT happens and then you have to reconcile the proof of payment with your other payments that come in dribs and drabs. Seriously, who has time for that? Luckily it’s 2019 and there are some great solutions to help you take control of your cash flow, and get your clients to pay you faster.

Instant EFTs that are actually Instant

Allowing your customers to pay with PayFast’s Instant EFT service takes the waiting game out of EFT payments. When your customers pay through Instant EFT by PayFast the funds reflect immediately in your PayFast account, that way you can ship or fulfil their order immediately. It’s peace of mind for you and gives your customer instant service which they will love. What’s more, you don’t need to wait for proof of payment. The payment is immediately reconciled in your PayFast Transaction History and you can download this along with all your other payments received.

Cloud Accounting, it’s the future

Xero is a cloud accounting platform that has changed the face of accounting for small businesses around the world. If you’re still manually inputting and reconciling your accounts then it’s time for a change! With Xero you can send clients invoices with pay now links that allow your clients to pay immediately through various methods such as credit or cheque cards, Instant EFT, Masterpass or even bitcoin!

Once payment is made from a Xero invoice, this will reflect in your Xero account. You can even add monthly PayFast payments to your Xero account by uploading them to Xero so your business accounts will be organised in one place (in the cloud!) where you can access it from anywhere.

Cover your bases

It makes sense that if you have a brick and mortar store, sales tend to drop off during the week and pick up on the weekends when people aren’t at work. Did you know this is the opposite for online stores? You can see in the graph below that sales actually increase during the week for online stores with Monday and Tuesday being the busiest. So cover all your bases and set up an online store to increase sales during the week. That way you’ll have a consistent flow of cash coming into your business.

Keep your taxes under control

Submitting tax returns for small businesses can be a minefield and you need to make sure this part of your business is air tight. If you have an accountant to assist you then that’s great. However, if not you can make use of Tax Tim who’ve just launched a product specifically for small businesses. Tax Tim assists individuals and small businesses file their tax return by asking simple questions (in English… no tax jargon) and convert your answers into a fully complete tax return ready to be submitted to SARS for a small fee. Who knows, you may even qualify for a tax refund and you didn’t even know!

Keeping your cash flow under control is easily doable, set aside some time during your schedule to make sure you know what’s going on in your business and if you’re really stuck and find you need a little cash injection the good news is that PayFast merchants can apply for a Lulalend loan straight through their merchant dashboard. Visit payfast.co.za for more information.

 

Unlocking economic growth through SME Financing

Unlocking economic growth through SME Financing

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It is quite widely known that the SME sector contributes up to 60% towards the Gross Domestic Product and labour force – which is why it is viewed as a lever for increasing economic growth.

You’d think with SMEs providing that much benefit traditional lenders, such as banks, would see the importance of making access to credit more easily accessible for SMEs, and work to find a suitable solution. The reality, however, is that 89% of SME’s that apply for funding through a bank don’t get financing that they went in for. There are various reasons why but often the process becomes too tedious and time-consuming or those that see it all the way through land up being declined.

This might sound quite discouraging if you’re a business owner, but the good news is that alternative lenders have started to take action and are addressing the need to assist SMEs. Not only that but they are holding each other accountable for responsible lending practices by driving industry standards through an organization called SASFA (South African SME Finance Association) to ensure SME customers are fairly treated and the reputation and sustainability of this SME Finance sector is maintained.

To read more about SASFA and how they are working with lenders like Lulalend to unlock economic growth read the full article here.

Three key challenges for SMEs in 2018 and how to overcome them

Three key challenges for SMEs in 2018 and how to overcome them

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The slowing economy, recent rating downgrades, on-going political instability, and a growing budget shortfall is leading to low business confidence. SMEs are certainly feeling this: in our recent Key Funding Challenges for South African SMEs report, only 30% of SMEs believed they would achieve revenue growth of more than 50% over the next year.

Conditions are unlikely to change dramatically over the next few months, prompting many SME owners to wonder how their business will survive and thrive in 2018. During the course of preparing our recent research report, we spoke to a hundred SMEs across the country to find out what their key challenges are.

Here’s our round-up of the biggest challenges SMEs are likely to face in the year ahead, and how to overcome them:

 

#1 – Funding

With traditional lenders shying away from unsecured short-term business funding, many SMEs are left without the working capital they need to grow, take advantage of new opportunities, and negotiate more favourable terms with suppliers and customers. Access the credit emerged as the biggest challenge faced by South African SMEs, with three out of five stating it as a key obstacle to their growth. SME owners should therefore turn toward the new generation of digital-first lenders that can take the business’ overall health into account when assessing applications for funding, instead of relying on antiquated box-ticking exercises.

#2 – Marketing

Marketing, customer acquisition, and customer retention were among the top challenges among our SMEs surveyed. This is alarming, since nearly half said expanded marketing efforts would have a direct positive impact on business growth. Entrepreneurs should become familiar with cost-effective marketing tools such as websites, email marketing, social media, and public relations to build relationships with current and potential customers.

#3 – Cash flow management

Improved cash flow management emerged as a top challenge for local SMEs, with financial reporting and admin not far behind. One issue may be that of financial literacy: many entrepreneurs start businesses out of necessity, and lack the basics of proper financial management. There are a plethora of free online courses available to entrepreneurs that can help build a better understanding of financial management. Online accounting tools such as Xero can also provide excellent support to SMEs by automating much of the day-to-day accounting processes.