Business Maverick

COVID-19

After a sluggish start, applications for a slice of the R200-billion Covid-19 bank guarantee fund are starting to take off

Illustrative image | sources: First National Bank (FNB) branch in Johannesburg, South Africa, (Photo: Nadine Hutton/Bloomberg via Getty Images) / Nedbank ATMS (Photo by Gallo Images/ Papi Moake) / Absa Bank (Photo: Gallo Images/Fani Mahuntsi) / Standard Bank (Photo: Gallo Images/Papi Morake)

It seemed at first that the take-up of the national Covid-19 guarantee fund, which allows local businesses with an annual turnover of up to R300-million to apply for government-backed Covid-19 loans from South Africa's commercial banks, was going to be a dud. But now that the paperwork is getting processed, loans are mounting up fast. It’s still too early to tell whether the full R200-billion will be utilised.

Absa, First National Bank, Investec, Mercantile Bank, Nedbank, Capitec, and Standard Bank have already started accepting loans, which is administered by the SA Reserve Bank. The loans are aimed at bolstering businesses amid the carnage caused by the coronavirus pandemic.

The government will guarantee R100 billion of these loans, with the option to increase the amount to R200 billion if the scheme is successful. According to recent press reports, the big four banks so far have lent up a total of R12-billion. The SARB says that there has not been much progress since then as the banks have procedures to adhere to and processing takes time.

Bongiwe Gangeni, Deputy Chief Executive of Retail and Business Banking at Absa says theCovid-19 pandemic has placed significant pressure on many South Africans businesses, and that many of its clients are currently focussed on reducing costs rather than incurring additional debt.

“We expect demand for credit to increase once there is greater clarity about the duration of the lockdown. With regards to the Loan Guarantee Scheme specifically, we have received more than 1,400 applications since the scheme went live. The majority of these applications are still in various stages of being processed. So far, we have approved loans to the total value of R210-million.”

Jesse Weinberg, SME Customer Segment Head at FNB states they have received around 14,000 applications for the Government GuaranteeCovid-19 Scheme. 

“To date, the Bank has paid out R400-million in facilities with 8,000 applications being processed. FNB continues to process various applications from impacted businesses and is actively facilitating payments for qualifying customers,” she states.  

 “We are pleased with the progress that has been made and remains committed to playing a meaningful role in ensuring that businesses are able to meet their financial obligations,” she says.

Nedbank has received more than 2,000 applications and approved loans to the value of almost R700-million as of 8 June 2020. “These deals are sitting at various stages of client acceptances, contract generation and signing, with a portion already having reached pay-out,” says Goolam Kader Nedbank Business Banking Managing Executive. 

He says the approval rate is 45% and that they are comfortable that they have sufficient capacity in their sales, credit and fulfilment areas to deal with the requests in line with expectations.

Standard Bank reports that it has provided R92-billion in relief to individuals, SMMEs and commercial clients in SA across 285,000 accounts.  Communications Head Ross Linstrom says where the SME Guarantee loan scheme is concerned, the bank is accepting applications and making disbursements to those who qualify and who meet their credit requirements. “We will provide the market with an update on the amount disbursed when we report in August,” he adds. BM/DM

 

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