COVID-19

SME Loan Project

 

The Covid-19 SME Loan Project

As part of the R500 billion investment that the SA Government will make to stimulate the economy, R200 billion has been made available as guarantees, via the Reserve Bank, to various banks to assist small businesses which have been severely impacted due to the lockdown.

SA Franchise Warehouse, who has been facilitating loans in the franchise industry for many years, has the infrastructure and knowledge to facilitate and assist small businesses with their application, approval and payout for a Covid-19 loan at optimum conditions.

Any business only qualifies once under the Government Guarantee, which means that the optimum amount needs to be applied for. There are no penalties for early settlement in case funds are not fully utilised.

To fast track the process, SA Franchise Warehouse has established a Covid-19 customised on-line application portal, specifically set up for this purpose.

Below you will find a set of questions and answers on the technicalities relating to the initiative.

FAQ

1. What fees are SA Franchise Warehouse charging?

3% of the loan amount, or a minimum of R10 000, excluding VAT.  The fee will be invoiced on approval of the loan directly to the business but will not be capitalised against the loan. There will be no initiation fees charged by the bank as they recover their costs through the interest rate charged.

2. What are the likely terms of the loan?
  1. Interest rate: Prime 
  2. Term: 60 months repayment with 6 months payment holiday
  3. No penalties for early settlement
3. Can I submit my application directly to my bank and save SAFW’s fee?

You certainly may but we recommend that you consider the following:

  1. The initiative allows for certain inclusions in the loan amount but needs to be motivated.
  2. The application, including projected cash flows, must demonstrate that the loan can be afforded and will be repaid within the term allowed. We know that turnovers will recover gradually and that all assumptions and financial modelling will require special attention. Applications where the affordability of debt cannot be proven, may not be approved.
  3. Any application submitted to the credit department within the banks needs to include a motivation which is generally prepared by the relationship manager inside the bank. In the interest of time, SAFW will be performing this task to allow the bank to turn around the application quicker.

The rules of the initiative do not explicitly require personal surety by the directors, but banks will probably require personal surety as a condition of the loan. SAFW will include in its submissions arguments on why surety should not be called upon.

4. How long does approval take?
After receipt of information required from the business owner, SAFW will turn around the preparation of an application in two days and submit to the primary bank of the business as soon as the business owner has signed off on the numbers. Some banks undertake to provide an answer in 7 days but that may be in the instance where no further information is required.
5. How do I manage my creditors in anticipation of the approval of my loan?
Regular communication with suppliers and creditors is crucial to the management of the relationship and your supply chain. Upon submission of your application to the bank, SAFW will communicate to your suppliers, per your request, confirming the status.
6. Is the service from SA Franchise Warehouse limited to franchised businesses?
No, SAFW just happened to be entrenched in the franchise industry for years but our service is available to any business with a turnover of less than R300 million per annum.
7. May I apply for a second loan if the funding received with the initial loan is not sufficient?
No, the conditions of the guarantee by the Reserve Bank state that a business may only qualify once. This means that it is particularly important to calculate the loan amount based on worst case scenario assumptions but still within the ability of the business to repay the loan.
8. Will I have to enter into an agreement with SA Franchise Warehouse to start the process?

You will be required to accept the T&Cs as part of the first phase of the application and the applicant will be requested to sign a letter of authority for SAFW  to be able to facilitate the process and to confirm its access to client information. Please note that BusinessXL Maximum is an appointed agent accredited to complete the application on your behalf.

9. When will the loan be paid out?
Once approved, the loan will be paid out in three monthly tranches as soon as loan documentation has been signed with the bank.
10. Which expenses can the loan proceed be used for?
Salaries and wages, rental and lease repayments, utilities, insurance premiums, security costs, supply related costs and certain operating expenses limited to three months.
11. Do I have to submit a business plan?
Yes. The bank will require an abbreviated business plan but SAFW will assist in this regard.
12. May I commission SA Franchise Warehouse to manage my application even after I have applied to my bank?
Yes, you are the client of the bank and may appoint a provider to assist in the same way you may appoint your accounting officer or business consultant to manage the process on your behalf. Kindly forward all the information you have provided to the bank to nawal@businessxl.co.za. We will register your application on the platform, pre-populate information received and e-mail you a link to track your application progress and to upload required documentation.

Start your application

If you are interested in registering an application, please complete the form below, and we can then assist you to complete your application.