Government will soon launch a new business bounce-back scheme aimed at supporting businesses in distress owing to the Covid-19 pandemic, finance minister Enoch Godongwana has announced.
Making the announcement while delivering the 2022 Budget Speech on Wednesday, the Minister said the scheme will use two mechanisms that will be introduced sequentially.
Firstly, he said, small business loan guarantees of R15 billion will be facilitated through participating banks and development finance institutions.
“This allows access for qualifying non-bank small and medium loan providers. Government will partner with loan providers by underwriting the first 20% of losses for banks and other eligible small and medium loan providers.
“The eligibility criteria, including the requirement for collateral, has been loosened. This mechanism will be launched and operational next month.”
Secondly, by April this year, government intends to introduce a business equity-linked loan guarantee support mechanism.
“We intend to bring the total support package through the bounce-back scheme to R20 billion. The equity support mechanism of this scheme will be facilitated through DFIs (development finance institutions). It will also be available to qualifying non-bank small and medium finance providers,” Godongwana said.
A Budget Review document accompanying the speech reveals that government will, over the next three years, spend R721 billion to promote faster and sustained inclusive economic growth to address unemployment, poverty and inequality plaguing the country.
In the 2022 Budget Review, Treasury said over the Medium Term Expenditure Framework (MTEF), expenditure would in this regard increase at an average annual rate of 8.5%, from R201 billion in 2021/22 to R256.8 billion in 2024/25.
The document states that over the medium term, the Department of Small Business Development would promote youth entrepreneurship by supporting at least 15 000 youth‐ owned enterprises.
“It will also reintroduce the Youth Challenge Fund at an estimated cost of R91.3 million, harnessing creative solutions to address youth unemployment.”