South African National Treasury says the COVID-19 loan guarantee scheme announced by President Cyril Ramaphosa in April has commenced and applications from distressed businesses are ready to be accepted.
“The initial set of participating banks includes, Absa, First National Bank, Investec, Mercantile Bank, Nedbank and Standard Bank, are ready to accept loan applications from distressed businesses which bank with them,” they said.
The activation of the loan guarantee scheme follows the finalization of legal details by National Treasury, the South African Reserve Bank and the Banking Association South Africa.
National Treasury says the loan guarantee scheme is an initiative to provide loans, guaranteed by government to businesses with an annual turnover of less than R300 million to meet some of their operational expenses.
“Funds borrowed through this scheme can be used for operational expenses such as salaries, rent and lease agreements, contracts with suppliers,” they said.
The National Treasury has provided a guarantee of R100 billion to this scheme, with the option to increase the guarantee of R200 billion if necessary and if the scheme is deemed successful.
South African government and commercial banks are sharing the risks of these loans.