COVID-19: financial help if you’ve been retrenched or own a business

Published on 16th April, 2020 at 05:16 pm

South Africa is one of many countries placed under lockdown due to the COVID-19 pandemic. As a result of this, many people have lost their jobs, and businesses have had to close.

To try to reduce the impact that this lockdown has had on businesses and individuals, Thembelani Thulas Nxesi, the Minister of Employment and Labour, together with President Ramaphosa, and business leaders in South Africa, have announced various measures under a financial relief package. Here’s the financial help you can access if you’ve been retrenched, or own a business that’s suffering as a result of the COVID-19 pandemic.

If you own a small, medium or micro-sized business…

Small, medium and micro-sized enterprises (SMMEs) affected by the lockdown are eligible for assistance under the Debt Relief Fund. To qualify for access to the fund, the company will need to register on the SMME South Africa platform first.

The National Treasury has introduced a R500 tax subsidy per worker, per month for four months, effective from 1 April 2020 to the end of July 2020. This means that the business owner can retain up to an additional R500 from the employer’s PAYE liability each month.

They will also allow those businesses with a revenue stream of below R50 million to delay paying 20% of their employee tax liabilities over the next four months, from 1 April 2020.

If your business needs to close for the lockdown period and potentially lay off workers, you will be able to apply for the National Disaster Benefit from the Unemployment Insurance Fund (UIF). This is only applicable if you are registered with UIF and make monthly contributions.

To request more information on financial assistance from the UIF or to receive the relevant application forms, email the dedicated mailbox: covid19ters@labour.gov.za. Once the Department of Labour has received your email, they will send out an automated response outlining the procedure and documents/information required by the Fund to process your application.

If required, they will also dispatch a provincial rapid response team to assist with applications and payments of benefits if your company has more than 50 employees.

The Department of Small Business Development has also introduced the Business Growth and Resilience Facility for those companies who manufacture or supply hygiene and medical products, such as sanitisers, detergents and tissue products. Under the facility, these companies will be able to get working capital from the government in order to buy stock and equipment, and apply for bridging finance.

Business owners that are in distress due to COVID-19 can also apply for a soft-loan through the SMME Relief Finance Facility. Loans are available from 1 April 2020 for a period of six months, but can be extended.

In order to qualify for either the Business Growth and Resilience Facility or the SMME Relief Finance Scheme, your business must be 100% South African-owned, 70% of your employees must be South African, and your business must be registered and be compliant with SARS.

The Small Enterprise Finance Agency (SEFA) has also introduced a Debt Restructuring Facility where qualifying SEFA-funded businesses can receive a six-month payment holiday on their loan instalments, provided they can show that they are directly impacted by the pandemic.

In addition, businessmen Johann Rupert and Nicky Oppenheimer are each donating R1 billion to assist South African small businesses and their workers affected by the COVID-19 pandemic. Sanlam – in partnership with the Motsepe Foundation – has pledged an additional R1 billion to this fund.

Business Partners Limited will administer this fund, available to tax-compliant South African businesses who can show that COVID-19 has impacted them. Learn more about how to access this Solidarity Fund here.

Worried about your finances? Speak to an expert financial planner who is best placed to advise you based on your personal portfolio, needs and risk. Click here to set up a meeting, which can be via phone call.

If you’ve been retrenched…

The Department of Labour has created an easy guide on Covid – 19 for employees, which outlines what documents workers need to get help.

Workers who are temporarily laid off because of the lockdown will be compensated through the Unemployment Insurance Fund (UIF), provided they apply for the illness or reduced work time benefit.

If employees have been quarantined for 14 days or longer, they could claim the illness benefit. To do this it is essential that both the employer and employee produce a letter along with their submission for the benefit to prove that special leave has been agreed due to the quarantine.

For the reduced work benefit, employees need to provide a letter from their company confirming that the business is closing down and temporarily laying off staff due to the coronavirus.

The maximum benefit will only be paid if the employer makes no payment to the employee during the shutdown period. If payments are made during the shutdown period, then the benefit will be reduced accordingly.

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