What is the Business Growth/ Resilience Facility under the Department of Small Business Development, and how do I access it?

Home » Business Support » What is the Business Growth/ Resilience Facility under the Department of Small Business Development, and how do I access it?
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Published: April 3, 2020

The Business Growth/Resilience Facility is specifically created to enable continued participation of SMMEs in supply value-chains, in particular, those who manufacture (locally) or supply various products that are in demand, emanating from the current shortages due to COVID-19 pandemic, in line with the National Treasury Instruction Note No. 8 of 2019/2020 (downloadable here, published 19 March 2020).

This facility will offer working capital, stock, bridging finance, order finance and equipment finance and the amount required will be based on the funding needs of the business.

The online application forms are now available, with instructions for applying set out below. It is important to note that only SMMEs that are registered on the database will be considered. Please go to https://smmesa.gov.za/ to register your business.

Business Growth Resilience Facility

According to the DSBD details are as follows with the proviso that these may potentially change given the fluidity of the current situation.

This facility will fund the following:

  • Production/supply of health care and related products that will be utilized to combat the spread of COVID-19 pandemic; and
  • Local production/manufacturing/supply of various products that will be required by the country emanating from a shortage due to COVID-19 pandemic.

Rationale for the facility: The funding will give local manufacturers and suppliers an opportunity to produce and strengthen their place in the market, which may lead to long-term contracts, post the COVID-19 pandemic.

Funding Terms

  • The facility will offer working capital (only direct costs), stock, bridging finance, purchase order finance and capital equipment finance;
  • The type of facility as well as the amount required will be based on the funding needs of the business;
  • The term of the funding will be determined by the business cash flow and debt sculpting techniques will be utilized;
  • Loan facilities will be provided at an interest rate of Prime less 5% pa. It must be emphasized that the business needs will be assessed thoroughly to ensure that the fund is exclusively used for the finance stated in (a), as misuse will not be tolerated under any conditions; e. Business Development Services from Seda, like Products testing, Certification, etc.

Qualifying Criteria

  • The business must have been registered with CIPC by at least 28 February 2020;
  • Company must be 100% owned by South African Citizens;
  • Employees must be 70% South Africans;
  • Priority will be given to businesses owned by Women, Youth and People with Disabilities;
  • Be registered and compliant with SARS and UIF;
  • For non-compliant Micro businesses, Seda will assist them to comply and request for assistance must be sent to: growthfund@seda.org.za;
  • Registration on the National SMME Database: https://smmesa.gov.za/

Funding Requirements:

  • Complete the simplified online application form available from dsbd.gov.za ; www.sefa.org.za : https://seda.org.za
  • CIPC Registration Documents;
  • FICA documents (e.g. Municipal accounts, letter from traditional authority);
  • ID Copies of Directors/members;
  • 3 (Three) months Bank Statements;
  • Latest Annual Financial Statements or Management Accounts not older than three months from date of application;
  • Business Profile;
  • 6 months Cash Flow Projections – where applicable;
  • Relevant Industry Certification – where applicable;
  • Estimations for funding requested.

Please click on the following link to COVID-19 SMME Relief Common Template:

http://www.sefa.org.za/Content/Docs/COVID-19_Finance_Relief_Application.pdf

Guidelines for Application: Business Growth/Resilience Facility:

Click here for the Guidelines for Application:  Business Growth/Resilience Facility

Click here for Small Business Development website

Debt Relief Finance Scheme versus Business Growth/Resilience Facility

In terms of the distinction between the two support measures offered by the Department of Small Business Development (DSBD), the DSBD has indicated that the purpose of the Debt Relief Fund is strictly to assist small businesses that are experiencing financial challenges as a result of COVID-19.

Said differently, the Debt Relief Fund will not support SMME’s that were already in financial stress prior to the outbreak of COVID-19.

In essence, the debt relief facility is a soft loan that will provide funding for existing businesses in distress due to the Coronavirus. The relief will be for a period of 6 months, effective 01 April 2020. In an instance where SMME’s will require further assistance for longer than 6 months, the terms may be extended dependent on their needs. Separate and tailor-made facilities are being finalized for the informal sector, spaza shop and the self-employed. Further, DSBD noted that the priority will be given to businesses owned by females, the youth and persons with disabilities.

In turn, the Business Growth/Resilience Facility is targeted at SMME’s that are manufacturing what could be considered essential goods and in high demand in light of the COVID-19 pandemic; particularly hygiene and medical products, a portion of which are likely to have been imported prior to the pandemic outbreak. The DSBD will focus on SMME’s that produce these products within South Africa in a bid to ensure that manufacturing capabilities are able to increase production and output to meet the increase in local demand in order to curb and manage the spread of the COVID-19 virus.

This facility will offer working capital, stock, bridging finance, order finance and equipment finance. In this regard, the department is inviting or requesting information from SMMEs who manufacture or supply products as listed in the aforementioned National Treasury Instruction Note and those in logistics to enrol on the www.smmesa.gov.za  and apply for support from Tuesday, 24 March 2020.

The funding amount will be based on the funding needs of the actual business. In terms of eligibility to qualify for funding, businesses need to meet government’s definitions of micro, small, and medium enterprises in South Africa, as published in the Government Gazette dated 19 March 2019. The turnover threshold for businesses to qualify for the funding depends on the sector in which they operate.

Key to the qualifying criteria for both the above-mentioned facilities is that the entities must be 100% South African owned, 70% of the employees must be South African, and the entities must be registered and be compliant with SARS. In the instance that an SMME is not compliant, they will be assisted with the compliance process before their applications will be considered.

Read Minister Khumbudzo’s statement here.

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