Bank credit approval criterion for SMEs to access loan scheme funding, says Basa

JOHANNESBURG – Financially distressed small and medium-sized enterprises (SMEs) wishing to access funding from the R200billion Covid-19 Term Loan Scheme must show that they were in good standing with their banks prior to the onset of the Covid-19 pandemic, as all loans will be subject to bank credit approvals.

This was revealed by the Banking Association South Africa (Basa) yesterday, as it outlined the qualifying criterion for the Covid-19 loan scheme announced by President Cyril Ramaphosa last week, as part of the R800bn economic relief and stimulus package.

The Covid-19 loan scheme is a special credit facility that is being disbursed on behalf of SA Reserve Bank (SARB) and the National Treasury, using the infrastructure of the banking industry.

The scheme will allow qualifying businesses to apply for loan funding from their primary bank for three months of operational costs, such as salaries, rent, and supplier payments.

“The Covid-19 loan scheme is a commercial arrangement and requires a credit application process, through which banks must evaluate if the business will likely be able to service all its commitments after the pandemic and lockdown,” Basa said.