Access to relief financing vital as SME clients not yet out of woods

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Jeremy Lang | Regional General Manager | Business Partners Limited | mail me |


South Africa cannot afford to lose its mall and medium enterprises (SMEs), says financing expert. As local business relief initiatives such as the COVID-19 Loan Guarantee Scheme come to a close, many SMEs continue to struggle, with an unfortunate number of businesses’ liquidity eroded by the pandemic and various lockdowns – especially those that operate in the hospitality and tourism industry.

A survey was conducted amongst clients at the onset of the national lockdown in 2020 found that 96% of respondents needed assistance to survive the continued lockdown and its effects.

A study conducted by Stats SA also revealed that 30% of formal businesses surveyed indicated that they were unable to survive a month without turnover, while over half (55%) indicated that they could only survive between one and three months.

Working capital required to restart businesses

While the easing of some lockdown restrictions and opening of many sectors has provided some relief, in order to weather the ongoing storm and stay afloat, many SMEs require working capital to restart their businesses and replenish reserves used to cover fixed overheads.

Added to this, with the country’s gross domestic product (GDP) contracting by 7% in 2020, experts are speculating that the economy may take years before reaching pre-COVID-19 levels, which is bound to negatively impact SME turnover further.

In response to these needs and to help these businesses get back on track, financial institutions have to be creative and innovative in their approach by offering products that are quicker to access with simpler processes driven by technology.

Most COVID-19 relief programmes were designed to assist businesses to cover fixed overheads. We have found that there is also a growing need amongst our clients to replenish eroded working capital.

As a result, we have launched the Restart Capital Fund, designed to assist our existing SME clients to speed up post lockdown recovery and get them back to pre-COVID-19 levels of trading.

Restructure and re-inventing

The COVID-19 crisis has forced business owners to restructure and re-invent in the scramble to save their business and retain their staff. Financiers have also developed programmes to ensure that clients have the resources they need to successfully navigate the new COVID-19 world.

Acknowledging that the pandemic has created extraordinary difficult times for these business owners, we have continued to support the well-being of their clients as well as the broader SME community.

To ensure quick and efficient access to financing it is also important to make sure that SMEs have the necessary financial and compliance information at hand.

With over R20 billion in finance provided to support business owners in South Africa over the past 40 years, we have made it possible for South African SMEs to grow, contribute to the local economy and GDP, and most importantly, create jobs.

As the country navigates its way to economic recovery, we appeal to fellow business financiers in both the public and private sectors to modify their offerings, in order to provide more relief and recovery finance to ensure we can save as many SMEs as possible.


 




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