As the nation hunkers down in the face of the Covid-19 threat, small businesses and franchises that make up the backbone of the economy are facing the stark reality of their situation – total lockdown, loss of revenue with the burden of rentals due, salaries to pay and other expenses to cover. Add to this the possibility of the lockdown extending beyond the 21 days and the effects of the pandemic stretching well beyond into the coming months.
Plans businesses may have had for the year ahead have been shattered and emergency measures have had to be taken to simply cover expenses for the days of the lockdown. How to survive both in the here and now and for the future is on everyone’s mind with many businesses facing closure if they are not given immediate assistance. As one business owner wryly commented; “if a big business like Edcon, having recently had a huge cash injection, can’t pay its creditors, what chance do we have?”
“This is not the time to be ducking and diving to avoid having difficult conversations,” says Vera Valasis, executive director of FASA. “As a business owner, with your livelihood and that of so many dependants on the line, you need to use this lockdown to consult, re-organise and re-boot. Having open and honest conversations with every one linked to your business is crucial – from your franchisor to staff; from your landlord to your bank, to your suppliers. You’ll be surprised that they are all in the same boat and, when it comes down to it, they do not want to lose you as a client nor lose the business they get from you.”
Government, in consultation with the banks and other funders have acted promptly in offering support initiatives – from tax subsidies for small businesses and individuals to lower contributions to the UIF, help for households that are in debt and a relief fund for businesses that may have their operations affected by the virus.
How quickly these will be implemented or translate into liquid funding is not clear as problems such as accessing on-line sites and going through the application process may take some time. But don’t let that deter you but keep applying for those relief measures. FASA has been consulting with government agencies like sefa who are happy to direct franchisors and franchisees to access some of the SME funding, which includes:
Covid-19 SMME emergency funding
Small business owners can call 0860 663 7867 or email email@example.com to find out what kind of government support they qualify for during the lockdown.
Temporary employee relief scheme
The government is in consultations on a proposal for a special dispensation for companies that are in distress because of COVID-19. If, for example, any employee falls ill through exposure at their workplace, they will be paid through the Compensation Fund. Through this proposal employees will receive wage payment through the Temporary Employee Relief Scheme, which will enable companies to pay employees directly during this period and avoid retrenchments.
This scheme is for small and medium businesses which are negatively affected, directly or indirectly, due to the coronavirus pandemic. Businesses wanting to apply for assistance from the Debt Relief Fund must register on the SMME South Africa portal at www.smmesa.gov.za. Seda will assist micro-enterprises to comply and request for assistance must be emailed to firstname.lastname@example.org
Tax payers who earn less than R6 500 per month will pay R500 less in income tax every month for four months. Sars will also fast-track the payment of employment tax incentive reimbursements from twice a year to monthly to get cash into the hands of compliant employers. Businesses that are tax compliant and with a turnover of less than R50 million a year will be eligible for a delay of 20% of their pay-as-you-earn liabilities for the next four months. They will also be eligible for a delay in their provisional income tax payments without penalties or interest over the next six months. For more information visit https://www.sars.gov.za/Media/Pages/CoronaVirus.aspx
UIF Covid-19 Ters Benefit
The Department of Employment and Labour announced measures related to the Corona virus and its impact on UIF contributors. To mitigate the impact of the 21-day national lockdown on workers, business and the economy, the UIF will be electronically processing applications for the Covid-19 TERS Benefit. Caring and responsible employers that are unable to pay the full salaries of the workers they send home for their health and safety due to the lockdown are encouraged to apply for the Covid-10 TERS Benefit from the UIF by sending an email to email@example.com.
In addition to the R2 billion rand contribution by the Oppenheimer and Rupert families as well as from the Motsepe Foudation, Sanlam and Naspers, the government has pledged R15 million to the new Solidarity Fund which will go towards assisting small businesses and their employees affected by the Covid-19 pandemic. A temporary employee relief scheme will help companies that are in distress to pay their workers and avoid retrenchments during the lockdown.
The Reserve Bank’s interest cut of 100 basis points will provide much-needed relief to consumers and businesses and all the major banks have come up with initiatives to assist businesses, students and households who are in debt. Speak to your bank to see what measures they have put in place to offer relieve – both personally and for your business.