SAIPA shines the light on progress with the recovery of small businesses


Event Africa Contributor 24/08/2021 Uncategorized

Thousands of small businesses in KwaZulu-Natal and parts of Gauteng are trying to rebuild themselves after the devastating political unrest that saw businesses looted, trashed and even burned to the ground.

The Department of Small Business Development has announced relief programmes for particularly the uninsured SME market. However, its history with response and turn-around times has left a lot of SMMEs not knowing if their applications were successful or not, due to poor response times, says Faith Ngwenya, Technical and Standards Executive at the South African Institute of Professional Accountants (SAIPA).

Some of the requirements to qualify for relief are also quite onerous, the Institute states. SAIPA invited relevant role-players such as the DSBD and the state-owned insurer SASRIA, to its regular fireside chats to discuss the road ahead for SMEs who have suffered severe losses during the insurrection.

Loss of trust

The Institute has urged the department to improve its communication with applicants who are waiting anxiously to hear whether they will receive the relief available.

Ngwenya says the private sector and the public are losing trust that there are indeed relief measures available, because they are left completely out of the loop in terms of progress with applications submitted.

The acting Director-General of the Department, Jeffrey Ndumo, says there are some factors impacting the turn-around times, especially the authenticity of the applications received. The goal of the department is to assist those who were affected therefore the department needs to prevent people who do not qualify for assistance from abusing the system, he says.

The Department has developed a business recovery support programme to assist SMEs in KwaZulu-Natal and Gauteng who require for example, working capital, stock, equipment, and vehicles to assist them in rebuilding their businesses.

The programme offers blended financing where 60% of the amount is covered by a government grant and 40% is a loan. The interest rate on the loan is 5% and the business will have a maximum period of 60 months (5 years) to repay the loan component.

Qualifying requirements

However, there are very specific requirements to qualify for this relief. SAIPA considers some of these requirements quite onerous and even impractical given the level of documentation that is required.

The deadline for applications is 20 August.

The Department requires that the business must be registered with the Companies and Intellectual Property Commission (CIPC), and it must be owned by South Africans. It further requires a bank statement for June this year to show that the business was operational and must also be registered with the South African Revenue Service (SARS) and be tax compliant.

It should also be part of the department’s SME database. The department also wants certified copies of the directors’ bank statements.  You can register your business on the Department’s database https://www.smmesa.gov.za

Ettiene Retief, Chairman of SAIPA’s National Tax and SARS Committee, remarked on the practical implementation of the requirement as many businesses may be temporarily non-compliant because of cash flow constraints or are in the process of obtaining a payment arrangement with SARS.

Ndumo acknowledges that there are “complex issues”. Some of the matters will be dealt with on a “case-by-case” basis. He adds that the requirements are “minimal”, and most businesses should have the documents they request.

Fast tracking claims

Muzi Dladla, Executive Manager: Stakeholder Management at SASRIA, indicated that it will work with the Department to find solutions to support small businesses.

SASRIA covers businesses against damage caused by acts of terrorism, public disorder, and violent strikes.

Dladla says they are committed to fast-tracking claims of up to R1 million and has partnered with all the insurance companies to enable the timeous payment of claims.

Claims ranging between R1 million and R99 million “may take a bit of time”. However, the state insurer will make interim payments even though the claims have not been finalised.

SASRIA has also undertaken to develop new mechanisms and structures whereby it can offer cover for more SMEs against events like the July-mayhem at a minimal cost.