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SME relief programme hits capacity – for now

Ben Bierman of Business Partners outlines the over-subscription to the Sukuma Relief Programme, the grants and loans envisaged, and the speed of disbursements.

NOMPU SIZIBA: The Covid-19 Sukuma Relief Programme for small and medium enterprises, set up by Business Partners on behalf of the Rupert family, has now been oversubscribed. Apparently the number of applications for financial assistance far exceeded the R1 billion made available in the form of a donation by the Rupert family. This just in a matter of days.

This demonstrates that there are many businesses out there that are likely to be left out in the cold, given limited resources. But, to tell us about the level of subscription, the amounts granted and loaned to businesses, and when these businesses will get funds in their accounts, I’m joined on the line by Ben Bierman, the MD of Business Partners Limited.

Thanks very much, Ben, for joining us. The Sukuma Relief Programme has been so overwhelmed with applications that you’ve already had to close the application portal so that no further parties apply. Just tell us about the kind of demand that you experienced.

BEN BIERMAN: We were actually astonished by the level of interest. And it’s probably indicative of the need that we see in the SME market. We did think to temporarily close the platform because we needed to, first of all, ascertain how many valid applications there are. So, as soon as we know the substance of all of those applications, there will be a possible further opening of the platform. We are also anticipating that further contributions will be made to follow the Rupert family and Remgro in potentially contributing more to the platform, which will make more capital available for SMEs.

NOMPU SIZIBA: Right.

BEN BIERMAN: Let’s give you some numbers. We’ve had more than 10 000 applications in the first three to four days – in excess of R2.8 billion. As you know, we only have about R1 billion available for providing relief to SMEs.

Read: More than 10 000 SMEs apply for Rupert’s R1bn

NOMPU SIZIBA: So the fund is supporting registered SMEs and sole proprietors. We know it was your intention to give loans to SMEs and grants to sole proprietors. Is that pretty much what has happened in practice?

BEN BIERMAN: Yes, there will be grants made available to the formal SMEs as well, so they will receive a grant component as well as a very low-interest loan. The effective interest rate on these loans over the five-year period will amount to less than the repo rate. So it’s a very low-interest loan with no collateral, so it’s a very attractive programme for any SME owner to participate or get involved with.

NOMPU SIZIBA: Interesting – no collateral. So how do you hold them down, then?

BEN BIERMAN: Well, I think one needs to recognise the circumstances that we are facing currently. So we will be assessing those businesses, to establish whether they are legitimate, whether they were actually in good standing – or somehow profitable – before the onset of this pandemic. That means that those that were good businesses, hopefully, and with the assistance the Sukuma Relief Programme will be providing to them, we hope to sort of tide them through.

And then in 12 months from now, if anything turns back to some kind of normality, and we hopefully start growing the economy again, it’s expected that they will recognise what has been provided for them, and then enter into a repayment programme for the sum that they were provided. So it is like an interest-bearing loan but, as I mentioned, the effective interest rate on that facility is quite low.

It’s more about paying it forward, because the intention that the Rupert family and Remgro had was to establish a permanent vehicle that could be accessed and can be utilised should we face another Covid-19, Covid-22, or whatever the case might be.

We anticipate that SMEs will always be, in certain adverse circumstances, in need of some kind of assistance. And I think that’s the long-term vision for this trust that has been set up – to continue providing some kind of support and by returning some of the capital you are basically making capital available again for another SME, in the sense that it can then benefit from a programme such as this Sukuma Relief Programme.

NOMPU SIZIBA: Different companies will obviously have different needs. What were your minimum and maximum disbursements, and what’s the turnaround between a successful applicant applying, through to you guys pressing the “send funds”  button?

BEN BIERMAN: Because of the specific focus of this programme, we basically limited the assistance packages from R250 000 to R1 million. Once they’ve completed the application, we promise to get back to them within seven days with the disbursement. I think it’s important to note that those payments that could be made under the relief programme will take the form of four monthly payments. So it’s to provide that necessary injection of capital as quickly as possible within seven days, and then subsequently on a monthly basis to confirm whether there are still employees within the business, and whether they are still paying their employees.

It’s just a further verification process that gives us a bit more time to confirm that in-principle approval within seven days.

NOMPU SIZIBA: So have you had sufficient capacity to process what is quite a big job?

BEN BIERMAN: Well, I work with an amazing group of colleagues. They’ve taken on this challenge and we’ve built systems and platforms in a record [period] of time. I think everybody seems to be committed over the circumstances that we’re facing at the moment. So we’ve basically been internally capacitated to deal with one part of the programme, and I was absolutely astonished by the extent of corporate South Africa offering support and assistance.

We’ve been lucky enough to receive assistance from Deloitte, an auditing firm, as well as one of the banks that is assisting us urgently with some components in the whole process. So it’s been a very interesting journey and very inspiring to see South Africans unite behind the cause and face the challenge.

NOMPU SIZIBA: Now, given the huge demand for the relief programme, you’re now calling on corporates and anybody else that’s willing to contribute to the Sukuma Relief Programme. So, if people are interested and they’re listening, where can they get in touch around this particular issue?

BEN BIERMAN: I’ve been astonished, because a lot of parties have already reached out and said that they would also like to participate. By the end of the week, we will establish most of the legal structures around the relief programmes, and we want to make sure that they are in place. But, if they can reach out to me directly, we will basically start sharing information with them and tell them exactly how that’s going to work in terms of the mandates and the structures and the registration of the trust.

By the way, it’s fascinating again just to reflect on how willing corporate South Africa and even the government structures are, the judicial system, because the courts are closed, as you know, and we’re going to get special permission to have the trust registered in the course of the next three days to ensure that we can actually get that vehicle formally established to sort of enable us to take the donations and accept them to the trust.

NOMPU SIZIBA: Do you lament that perhaps it’s only at times like this, or times like these, when that working together ethic seems to come to play, rather than when it’s just a normal day, because a normal day in South Africa is still a sort of crisis day because our economy is in such dire straits?

BEN BIERMAN: I think we have to accept that South Africans are unique and fantastic and special. We have a noisy democracy and I think it’s a vibrant democracy, and we should expect the various debates and the various differences of opinion.

And then you just get a huge sense of comfort and patriotism, almost, to see how, if the chips are down and we face a unique crisis, how everybody unifies behind trying to do the best for everyone, for every citizen in South Africa.

So yes, I hear your point, but I am still inspired by what we are going through, fully recognising that the risks that we are facing as a country with this pandemic.

NOMPU SIZIBA: Our thanks to Ben Bierman, the MD of Business Partners Limited.

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This is just more DEBT. Easy to get, very hard to repay. Inflation from our currency weakness will trap a lot of small businesses in another debt trap.

Can the country not set up a fund for people killed in taxi accidents? Think of the number of families that have been broken through these death over the years. Maybe if the taxi industry was forced to contribute it could help with the road carnage.

End of comments.

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