A multi-billion rand loan guarantee scheme announced by South African President Cyril Ramaphosa last month is now officially in operation, with the assistance of the country’s major banks, including FNB, Investec, Standard Bank and Absa.
Ramaphosa announced the scheme as a measure to soften the blow of the coronavirus pandemic and national lockdown on banks as well as their individual and business clients.
The following statement provides more information:
LOAN GUARANTEE SCHEME OPENS
The Covid-19 loan guarantee scheme announced by President Cyril Ramaphosa in April will operate from today, 12 May 2020. The initial set of participating banks (Absa, First National Bank, Investec, Mercantile Bank, Nedbank and Standard Bank) are ready to accept loan applications from eligible businesses which bank with them.
The activation of the loan guarantee scheme follows the finalisation of legal details by National Treasury, the South African Reserve Bank and the Banking Association South Africa.
The loan guarantee scheme is an initiative to provide loans, guaranteed by government, to eligible businesses with an annual turnover of less than R300 million to meet some of their operational expenses. Funds borrowed through this scheme can be used for operational expenses such as salaries, rent and lease agreements, contracts with suppliers, etc.
Government and commercial banks are sharing the risks of these loans. Initially, the National Treasury has provided a guarantee of R100 billion to this scheme, with the option to increase the guarantee to R200 billion if necessary and if the scheme is deemed successful. Eligible businesses should contact their primary or main banker.
More details on the scheme can be found in a Frequently Asked Questions guide posted at http://www.treasury.gov.za/ https://www.resbank.co.za/ Pages/default.aspx and https://www.banking.org.za/.
Further queries should be directed to the individual banks, which are administering the scheme.
Jointly issued by National Treasury, The South African Reserve Bank and The Banking Association South Africa
Date: 12 May 2020
For more coverage on COVID-19 visit: https://www.cnbcafrica.com/covid-19/
