The South African Future Trust (SAFT), established by Nicky and Jonathan Oppenheimer, will make funds available to South African businesses impacted by the coronavirus from 3 April 2020.
Nedbank said that it will help facilitate the distribution of loans to small businesses on behalf of SAFT.
“The main aim of the SAFT is to mitigate the immediate economic impact of the Covid-19 crisis by keeping companies in business and protecting jobs, in order to fast track South Africa’s economic recovery after this pandemic,” Nedbank said.
“The trust will extend direct financial support to employees of South African Small, Medium and Micro-sized businesses who are at risk of losing their jobs or will suffer a loss of income because of Covid-19.”
The SAFT has been funded with an initial contribution of R1 billion by Nicky and Jonathan Oppenheimer.
Four of South Africa’s leading banks, including Nedbank, will administer the scheme at no cost to the fund. The banks have also waived their normal credit fees for all loans approved under the SAFT scheme to maximise the funds available to recipients.
“Nedbank acknowledges that this is a time of heightened anxiety for our small business clients and their employees, not just in terms of their personal health but also their economic survival. We welcome this initiative which will provide some relief to small businesses, the lifeblood of our economy,” said Nedbank Retail & Business Banking managing executive Ciko Thomas.
“We will continue to look for ways to support our clients during this time of uncertainty and are honoured to play a part in facilitating this process,” said Thomas.
How to apply
The scheme is currently available to clients of the four banks. SMMEs need to apply through their main bank.
Once approved, the funds will be paid directly to the nominated employees, however liability for the loan remains with the business.
The partner banks are Nedbank, Absa, Standard Bank and FNB.
“We are working hard to extend this partnership, with an aspiration of achieving full market coverage. We invite other financial institutions to come forward,” the trust said.
How it will work
During this initial Covid-19 period, the funds will be disbursed as interest-free loans over a five-year term.
Once Covid-19 has passed, any further funds donated or repaid to SAFT will be deployed towards initiatives aimed at accelerating economic growth and employment creation within South Africa.
The reason for choosing this approach is to allow SMMEs who are suffering from short-term cashflow constraints to continue operations during this time of crisis, whilst retaining their employees.
“We wish to allow them much-needed breathing room to make sustainable, long-term decisions for their future. SAFT does not intend to play a role as a lender once this immediate crisis has passed,” the trust said.
SAFT loans will be:
- Interest-free for a five-year period.
- Subordinated to other pre-existing debt.
If businesses are unable to repay the loan, SAFT will work closely with SMMEs to ensure that repayment plans are in place which are sustainable for the business concerned.
Eligibility criteria for SMEs
- Annual turnover below R25 million
- Must have been trading for at least 24 months
- It must have been a sustainable business at 29 February 2020
- It must have been adversely affected by the Covid-19 outbreak
- Company identification
- Registration number (for CCs)
- Master’s reference number (for trusts)
- ID number and address (for sole proprietors)
- PAYE number
- Income tax number
- Confirmation of employment status of employee