COVID-19 Business Term Loan
In his recent emergency Budget Speech, Finance Minister Tito Mboweni reconfirmed the Government’s commitment to supporting businesses during the current crisis with a series of amendments to the COVID-19 Term Loan Scheme.
While the initial phase of the Scheme focused on assisting Small and Medium Enterprises with an annual turnover below R300 million, this second phase of support provides COVID-19 Term Loans of up to R100 million for all qualifying businesses, regardless of turnover.
Phase 2 also allows for businesses to apply for loans to support up to 3 month’s operating expenses and a payment holiday of up to 6 months which will be subject to the Bank’s credit assessment (please note that applications for 6 months’ operating expenses have closed).
Applications are now open and can be accessed below.
The qualifying criteria have been listed as businesses that:
- Have an existing banking relationship with Standard Bank
- Are in good standing with the Bank as at 31 December 2019
- Are registered with the South African Revenue Service (SARS)
- Are in a state of financial distress and require funding for operational expenses
- Have no existing capacity to borrow that can help alleviate financial distress; this excludes overdraft facilities and / or facilities not typically intended to support operational expenses
- 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 (including their direct and indirect subsidiaries) and companies with capital market funders or funding instruments
- Is a South African entity, and funds lent and advanced through this scheme will be pursuant to ensuring the financial stability and continuation of South African businesses
- Loans of up to R100 million are available per business, at a consolidated business group level
- Usage of loans will be for business operational expenses for a period of up to three (3) months. Operational expenses include items such as salaries, rent and lease agreements, contracts with suppliers, utilities, etc.
- The loan repayment period is 60 months (5 years).
- You may apply for a payment holiday (deferral) of up to 6 months; however, based on the Bank’s credit assessment, a shorter deferral period may apply
- 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 may only hold one COVID-19 loan at one bank
- An exception to this will be where an eligible business applies for a second COVID-19 loan under phase 2 and is approved in accordance with the relevant terms and conditions. The eligible business will then hold two COVID-19 Term Loans with the same Bank provided the two loans collectively do not exceed the maximum loan amount (R100m for up to 3 month’s operating expenses) or maximum payment holiday period (max 6 months) permissible under the COVID-19 Loan Product.
- Further exceptions may exist for loan amount requests above R50m; in these instances, you will be guided by your Relationship Banker
- 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 loan can be settled in part or in full prior to the maturity term without penalty
- 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 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.
- These loans will be offered at Prime Interest Rate
- Yes, a business that has qualified for a COVID-19 Term Loan under either phase 1 or phase 2 will be able to access further loans in future with a financial institution
- In order to do so, consent from the Bank where you hold your COVID-19 Term Loan will be required – for businesses that hold the COVID-19 loan with Standard Bank and look for further funding with us, this consent will take place automatically as part of the credit assessment. In the case where you hold a COVID-19 loan with another financial institution, consent would need to be provided in writing from the relevant Bank.
- You may apply for a payment deferral (i.e. payment holiday) of up to 6 months. The first payment will be due in the month after the end of the deferral period, and every month thereafter for a total of 60 months unless the loan is settled early
- The payment holiday will kick in the month after the last draw down of the loan takes place (e.g. if you have 6 drawdowns taking place monthly for 6 months, your 6-month payment holiday will start the month after which that last drawdown took place)
- Yes; you can apply for phase 2 as well.
- If you received a COVID-19 loan under the initial phase, but still require emergency relief as a result of the extended lockdown, you may apply to the same Bank for a second COVID-19 loan. The total of the first and second loan may not exceed the maximum amount of R100m, or the maximum requirement of 3 months’ operating expenses
- Should you wish to apply for a further 3 month’s operating expenses under phase 2, please use the same loan application form – indicate that you already hold a COVID-19 Term Loan with the Bank in the relevant section, and apply for an additional 3 month’s operating expenses (in order not to exceed 6 month’s operating expenses) with either a 3 or 6 month payment holiday.
- You can also apply to extend the payment holiday period of your existing COVID-19 Term Loan from 3 months up to a maximum of 6 months – this can be done by accessing the same application form and completing the relevant sections
- Should you qualify for a second COVID-19 Term Loan, the two loans will run concurrently (and will not be consolidated into one loan)
- If you were previously declined for the initial phase COVID-19 loan on the basis on not meeting scheme 1 rules, you may reapply for phase 2 of the COVID-19 Term Loan.
- A loan application will be assessed to consider funding business operating expenses for a maximum period of up to 3 months, with a payment holiday of up to 6 months
- Operating expenses includes items such as:
- Salaries and wages
- Rental and lease payments in force prior to 29 Feb 2020
- Utility payments
- Supply chain expenses
- Cleaning and maintenance services
- Insurance premiums
- Other operating expenses e.g. security for premises, cash in transit etc.
Repayment of interest and capital starts the month after the approved payment holiday. Borrowers can repay the loan ahead of schedule without incurring any penalties.
- Repayment of the loan will take place via debit order or through manual transmission 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
- Interest will accrue from the first drawdown
As a Standard Bank customer, you can apply online through the Standard Bank COVID-19 website. Applications are now open: click here to apply.
If you applied for phase 1, and are now applying for phase 2, or applying for an extension on your current phase 1 payment holiday, the same application link can be used.
For Corporate and Investment Banking (CIB) clients, while you may apply online through the link above, it is recommended that you contact your CIB Relationship Manager to commence the application process.
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 6 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.
- Please note that we continue to receive a high volume of applications; you can expect to hear back from us within 14 business days informing you of the status of your application.