Please note: The information provided in this blog is correct at the time of writing, but as this is an unprecedented and ever-changing situation, we will do our best to ensure we keep ourselves and our clients up to date. Please check back regularly for updates – we will also notify you of these by email and system notifications.
As mentioned in our previous blog on options for employers with respect to their employees, there are also a number of Government initiatives being implemented to help support businesses through the lockdown period.
In this blog, we will provide a brief overview on schemes that could provide support to businesses in general, but also for businesses working in specific sectors.
Opportunities for Businesses to Claim Tax Relief
During the address by Ministers in the Economic Cluster on 24 March, a number of pledges were made to help support businesses over the coming period.
One such measure permits tax compliant businesses with a turnover of less than R50 Million to delay 20% of their EMP 201 liability over the next 4 months. We are awaiting guidance on how this is to be administered, so we will update you as to whether any changes are needed when we know more.
Additionally, a portion of corporate income tax can be delayed for 6 months, with both of the mentioned schemes having no penalties or interest accrue over their respective periods.
Additionally, are prospective temporary reductions of Unemployment Insurance Fund (UIF) and Skills Development Levy (SDL) contributions.
Further measures being explored to ease the strain on businesses a R500 per month subsidy on the Economic Tax Incentive (ETI) is to be implemented for the next 4 months.
We are awaiting announcements on the measures mentioned in this paragraph and will update you as soon as we know more.
Opportunities for Businesses to be Supported by the COVID-19 Temporary Employer-Employee Relief Scheme (TERS)
COVID-19 TERS is a scheme which is aimed at providing support to businesses that are in distress due to the COVID-19 pandemic. If a company has their funding approved, the UIF will fund companies which are directly affected by COVID-19 in the form of a TERS allowance. The default length of funding is for 3 months.
We will be releasing a blog post dedicated solely to TERS very soon. Please continue to check the SimplePay website in the coming days for more information!
Support for Small, Medium and microsized Enterprises (SMMEs)
In her speech on the 24 March, Ms Khumbudzo, Minister for Small Business Development laid out plans to support SMMEs during the lockdown period. R2 billion was donated by the Rupert & Oppenheimer families, solely to support small businesses and their employees. This is intended to be done in multiple ways, through the Business Growth and Resilience Facility, as well as the SMME Debt Relief Finance Scheme.
In order to qualify for the schemes, Ms Khumbudzo laid out qualifying criteria, namely the SMME, self employed individual or small company must:
- Have been registered with CIPC by at least 28 February 2020
- Be 100% SA owned
- Employ at least 70% South African citizens
- Be SARS & UIF registered and compliant.
- (Non-compliant SMMEs can make application, but they will only be considered when they are fully compliant.)
- Be registered on the national SMME database (www.smmesa.gov.za).
- Be able to show that it was negatively affected by the COVID-19 pandemic.
Priority is going to be given to woman, youth and people with disability owned businesses. If your company does not meet all of the above criteria, the Small Enterprise Development Agency (SEDA) can assist you in becoming compliant.
The application forms for the schemes detailed below are to be released on 2 April, so it is advisable to ensure that your company is registered on the SMME database and you have inspected your SARS & UIF compliance to see where you stand.
Debt Relief Finance Scheme
The aim of this scheme is to fund working capital for self-employed and informal workers and is the “safety net” the president referred to in his lockdown speech on 23 March. The intention is to run the scheme for 6 months, with working capital being loaned at a rate of prime less 5%. The size of the facility available to each SMME will be determined by comparison of the cashflow before and after COVID-19.
Additionally, Small Enterprise Finance Agency (SEFA) funded SMMEs will be able to take advantage of a payment holiday, removing loan obligations for 6 months. The deferment of the loans will not be capitalised, meaning that you will not pay any interest for the 6 month period. SEFA SMMEs will also be able to benefit from an audit to determine whether the client could benefit from a debt restructuring, with options such as converting to longer loans and additional funding to be explored.
The specific requirements for the Debt Relief Finance Scheme are found here.
Business Growth and Resilience Facility
In this scheme businesses geared to take advantage of the supply opportunities and shortages resulting from the COVID-19 pandemic will be able to partake in the scheme.
Working capital will be funded, but only for those that are directly linked to the direct cost of the business. The amount of funding will be based on the individual needs of the business, with loans being made at prime less 5%. In an attempt to dissuade any abuse of the scheme, if any entity is found to abuse this beneficial rate, they will be forced to repay the loan in full at prime plus 10%.
The page relating to the requirements can be found here.
SMMEs are encouraged to make use of the alternative support email and hotline number in preparation for the release of the application forms on 2 April. The contact details are [email protected] & 0860 633 7867.
In the president’s 23 March speech there was mention that seed capital will be provided for the solidarity fund. The fund will be administered by a team made up of financial institutions, accounting firms and the Government.
The aim of the fund is to alleviate the suffering and distress the virus inflicts on the country through: preventive measures to flatten the curve; more widespread testing to help detect new cases; caring for those who have contracted the disease; and supporting families affected. If you are in the position to be able to donate to the solidarity fund, you can do so at www.solidarityfund.co.za.
As always, we’re here to help where we can. Please feel free to get in touch if you need help with any of the above on SimplePay.
Take care, stay home, stay safe.