SMEs get back to businesses

Small businesses, many counting among the enterprises hardest hit by the lockdown, are on the road to recovery as the economy reopens. Retail Capital, a firm that offers funding and asset finance to small businesses in SA, said more than 85% of its clients are trading at an average of 80% of preCovid levels. /

Small businesses, many counting among the enterprises hardest hit by the government s

’ Covid-19-induced lockdown, are on the road to recovery as the economy gradually reopens.

Cape Town-based Retail Capital, a firm that offers funding and asset finance to small businesses in SA, said more than 85% of its clients are trading at an average of 80% of pre-Covid levels. Retail Capital has supported 28,000 small and medium-sized enterprises (SMEs) and provided more than R3bn in financing to date.

Retail Capital said sectors that have recorded gains despite Covid-19, include fast-moving consumer goods (FMCG), specialist electronics, house and homeware and hardware. The automotive sector has also recovered, and is now trading at 100% of pre-Covid-19 turnover levels. Sectors that have taken longer to recover and have suffered the most include food and beverage, beauty salons and personal care and clothing, textile and footwear.

Retail Capital said industries that have reached out to it for the R300m it has advanced since the start of Covid-19 funding support, include the automotive, FMCG, hardware, and food and beverage sectors, which have been able to pick up operations as the lockdown restrictions have been slowly lifted.

The company has cushioned some of its struggling clients by offering payment breaks, it said. In effect this has injected R280m in liquidity back into the economy.

“Since the start of the lockdown on 26 March, Retail Capital has disbursed almost R300m in new funding support to over 4,800 small businesses,” Retail Capital CEO Karl Westvig said on Thursday.

Beyond that, we suspended debit orders for our clients, so they could use that money to keep their businesses afloat and pay their staff.

“Millions of South Africans of all walks of life depend on the survival of SMEs.”

Westvig said there was a lot of hope followed by disillusionment about the Treasury s

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R200bn guarantee scheme to assist businesses.

To date only R14.5bn has been disbursed, mainly to medium-sized businesses, and with onerous conditions.

“The approval rate is low, the take-up rate is low and the small and micro businesses have been ignored as they cannot provide security and the detailed information to pass the credit criteria,” Westvig said. Retail Capital s

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R300m in disbursements and more than R500m in total support has been without any government backup, he said. The government s stringent

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measures to curb the spread of the coronavirus led to the closure of many small businesses that simply did not have large enough cash buffers to remain afloat during the lockdown, which restricted trade. Many more remain on the brink of collapse despite the government moving to open the economy.

The loan guarantee scheme, which was established in May, is part of the country s R500bn

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economic stimulus package and is targeted at companies with turnover of R300m or less per year.

However, concerns were raised about the scheme s failure

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to reach small businesses, many of which do not meet the strict funding criteria set by banks.

RETAIL CAPITAL HAS SUPPORTED 28,000 SMALL AND MEDIUMSIZED ENTERPRISES AND PROVIDED MORE THAN R3BN IN FINANCING TO DATE