NEF and SEFA interventions

01 Sep 2021 12:30 pm by John de Villiers

Economic rebuilding funding packages – NEF and SEFA interventions

The National Empowerment Fund’s Economic Recovery Fund has a focus on manufacturing, retail and services businesses, while the Small Enterprise Finance Agency (Sefa) Small Business Development Business Recovery Support Packages support informal and micro businesses sector.

Businesses affected by the violent looting and unrest that took place in KwaZulu-Natal and Gauteng in July may now apply for financial assistance from Department of Trade, Industry and Competition (the dtic) and its Development Finance Institutions, the Industrial Development Corporation (IDC) and the National Empowerment Fund (NEF).  The R3.75 billion package consists of a number of business recovery interventions the aim of which is to provide industrial loan support at zero percent interest rate to affected companies towards the rebuilding of infrastructure, and restoration of equipment, fittings for the premises, stock and provision of working capital.

Unpacking the National Empowerment Fund’s (NEF’s) initiatives gives us:

  1. Economic Recovery Fund

    Amount R250 million

    Purpose

    The purpose of the NEF Economic Recovery Fund is to support businesses that were adversely affected by the recent unrest and riots in Gauteng and KwaZulu-Natal. Support will be provided in all sectors of the economy with the focus on manufacturing, retail and services businesses.

    Application of funds

    • To support building improvements and fittings for premises
    • Replacement of machinery, equipment, commercial vehicles and replenishing stock
    • Working capital shortfalls owing to supply chain disruptions

    Salient features

    To be eligible:

    • The business must be located in Gauteng or KwaZulu-Natal, and must demonstrate that it was affected by the riots and the unrest
    • The business is not covered by insurance or there is an insurance shortfall component
    • The business must be a registered company, close corporation or cooperative
    • The applicant must be a taxpayer in good standing and must provide proof thereof from the South African Revenue Service
    • The applicant must demonstrate that jobs lost during the unrest will be restored or increased within 12 months of funding
    • Where a business is insured, funding can be provided as bridging finance against a cession by the insurance company of the insurance proceeds

    Financial instruments terms and other

    • Bridging finance
      • Price 0%
      • Term 12 months
    • A maximum of R10 million in loan funding will be provided
    • Term loan
      • Price 0%
      • Term up to 60 months

    Exclusions

    Businesses in provinces other than Gauteng and KwaZulu Natal

  2. Small Enterprise Finance Agency (Sefa) Small Business Development Business Recovery Support Packages

    The Department of Small Business Development is calling on all small enterprises and informal traders whose businesses were looted or vandalised during the July 2021 unrest to apply for the Business Recovery Support Packages

    Business Recovery Support Programme

    The purpose of the business recovery programme is to fund small enterprises that were negatively affected by the looting and unrest that took place in July 2021. The intention is to accelerate business and economic recovery, with a view to curb job losses as well as business closure.

    Application of Funds

    The Business Recovery Support Programme will focus on the following:

    • Uninsured small enterprises impacted negatively by the unrest predominantly in KwaZulu Natal and Gauteng provinces
    • Small enterprises that require funding for working capital (including stock), equipment (including vehicles for delivery purposes) and furniture, as well as fittings
    • Small enterprises with existing funding from other lenders will still be considered

    Salient features

    The small enterprise must:

    • Be negatively affected by the unrest (SAPS case number to be submitted)
    • Be a registered legal entity in South Africa (CIPC)
    • Be a 100% owned by South African citizens
    • Have been in operation as at 30 June 2021
    • Be registered and compliant with the South African Revenue Service
    • Be registered on the National SMME Database – https://smmesa.gov.za
    • Have an affidavit confirming that the business is not insured

    Financial instruments, terms and other

    Financial Support

    • The programme offers the following financial support: Financial support
    • Blended finance, which is a combination of a grant (60%) and a loan (40%)
    • Interest rate on the loan component is limited to 5%
    • Initial payment moratorium of up to a maximum of 12 months for small enterprises in KwaZulu-Natal and Gauteng, and six (6) months for other provinces
    • Repayment period of a maximum of 60 months
    • Maximum funding accessible per entity is R2 million

    Non-financial support

    Pre-investment

    • Small enterprises will be assisted by the Small Enterprise Development Agency to package their funding applications.

    Post-investment

    • The programme through the Small Enterprise Development Agency will offer customised Business Development Support based on the needs of the small enterprises

    Exclusions

    Small enterprises not negatively affected by the unrest in July 2021.

  3. Informal Traders Support Programme

Amount R40 million

Purpose

The purpose of this scheme is aimed at supporting informal and micro businesses in the informal sector that were negatively affected by the looting and unrest in July 2021.

Application of Funds

The Informal Traders Support Programme will focus on the following:

  • Provision of business-focused support packages through financial and non-financial support
  • Purchases of stock items with intention for resale to residents, other small businesses and other casual customers, based on need

Salient features

  • Must be a South African
  • Should have a bank account in SA.
  • No minimum turnover required for vendors
  • Willing to participate in the DSBD/Seda facilitated business development processes
  • Preference will be given to businesses owned by women, youth and people with disabilities

NB: Applying entities in this category need not be registered with CIPC and SARS due to their size and status of operations.

Financial instruments, terms and other

Financial Support

The programme offers the following financial support:

  • The scheme will support 8 000 entrepreneurs @ R3 000 each (as a once-off grant)

Exclusions

Informal traders not negatively affected by the unrest in July 2021.

Download the Business Recovery Package Application Form here

To read more about the funding packages see funding packages for the full document or go to http://www.thedtic.gov.za/economic-rebuilding-package-now-open/ for a list of contacts and centre hotline established to help with enquiries.