COVID-19 Business Term Loan
The COVID-19 Term Loan Scheme for Small and Medium Enterprises (SMEs) is one of many socio-economic reliefs announced by President Cyril Ramaphosa during his recent address to the nation.
The initiative is the result of commercial banks working with the National Treasury and the South African Reserve Bank to provide government-guaranteed loans to SMEs that may not be able to meet their financial obligations during the lockdown and when the economy reopens.
Applications are now open and can be accessed below.
The initial qualifying criteria have been listed as businesses that:
- Have an existing banking relationship with Standard Bank
- Have an annual turnover of R300 million or less measured at a group level
- Are in good standing with the Bank as at 29 February 2020
- Are registered with the South African Revenue Service (SARS)
- Have been negatively impacted by the COVID-19 lockdown and the resultant slowdown in the economy
- Have no existing capacity to borrow in order to alleviate financial distress. This means that you do not have an existing overdraft facility(ies) and/or other general short-term banking facilities that you can use for working capital purposes
- Are in a state of financial distress due to being negatively impacted by the COVID-19 lockdown and the resultant slowdown in the economy
- Are a company, statutory body corporate, close corporation, sole proprietorship, trust or partnership, association, joint venture or any similar entity, but excludes state owned entities, listed companies and companies with capital market funders or funding instruments
- Loans are available for business operational expenses such as salaries, rent and lease agreements, contracts with suppliers, utilities, etc. for a period of three (3) months
- Approval of applications for qualifying businesses are subject to the Bank’s risk-evaluation and credit-application processes. The Bank holds the right to decline an application based on its assessment
- A business can only apply for one COVID-19 loan from one bank
- These loans will be offered at prime interest rate
- The loan repayment period is 66 months, with the first 6-months being a payment holiday; at the end of month 7, businesses will be expected to start repaying the loan over the next 60 months (5 years)
- Interest will accumulate from the date on which the first drawdown on the loan occurs
- No additional administration and/or initiation fee will be charged for these loans
- The following restrictions apply should customers qualify for the COVID-19 Term Loan:
- The loan cannot be used for payment of dividends and shareholder loans, and payment of such loans are restricted until the COVID-19 loan has been repaid in full
- The loan cannot be used to pay existing debts and is only for future operational expenses
- The owners may be required to sign personal surety/personal guarantee
- The loan amount cannot be used to pay retrenchment packages
*Should your loan be approved, your loan agreement will contain details that reflect the most up to date information and terms and conditions.
Even if you have qualified for another relief loan, your business can qualify for this loan based on future operational expenses. More specifically, but not limited to:
- If you have qualified for payment holidays, or other relief from the Bank, you will still be able to apply for this loan should you meet all other criteria
- If you have applied for a SAFT loan, you can still apply for this loan, however, the SAFT loan amount should be deducted from the salary cost item
- If you have applied for other relief funding, e.g. UIF, and have been approved for such, please exclude the line items that have been catered for through other funding
Please note: Only one COVID-19 Emergency Loan under this scheme can be applied for at one Bank.
- A loan will be granted to eligible businesses to provide liquidity in order to continue paying operating expenses over the next three months
- Operating expenses includes items such as:
- Salaries and wages
- Rental and lease payments
- Utility payments
- Supply chain expenses
- Other operating expenses e.g. security for premises, cash in transit etc.
Repayment of interest and capital starts after the initial six-month repayment holiday, and in month seven (7) businesses will start repayments for a period of five years (60 months) to pay back the loan amount in full. Borrowers can repay the loan ahead of schedule without incurring any penalties.
- Repayment of the loan will take place via debit order on a pre-determined date
- The borrower will not incur early settlement penalties unless the borrower settles the loan in full before the expiry of the agreed term by means of a refinance
Standard Bank customers must provide the following information when applying for the COVID-19 Term Loan:
In addition to information about the business and director/s, shareholder/s, partner/s, trustee/s, etc., the following information will be required:
- View of business turnover over the last 12 months
- View of business expenses, current debt repayments and net profit before tax over the last 12-month period
- Business’s income tax number
- Description of how the business has been impacted by COVID-19
- A list of the business’s monthly operational expenses for three months for which a loan is required, broken down by:
- Salary and wages payments
- Rental and lease payments
- Supplier payments
- Utility payments
- Other operating expenses
Please note that additional documentation may be requested once your application has been received based on our assessment and verification criteria. This may include annual financial statements and/or proof of income and expenses.
- Upon initial application, you can expect to hear back from us within 7 business days
- If additional information is required, a new timeline will be estimated
- Should you not hear back from us within 8 business days, please contact your relationship banker directly to request an escalation.