Banks under fire over R200bn loan scheme

Only R15bn from government-backed fund distributed to small businesses, says minister

BANKS are facing tough criticism from MPs after failing to assist struggling small businesses through the government-sponsored R200 billion loan scheme.

The government announced the loan scheme after President Cyril Ramaphosa first spoke of the R500bn stimulus package to fight the spread of Covid-19.

Yesterday, briefing the National Council of Provinces (NCOP), Small Business Development Minister Khumbudzo Ntshavheni said she was concerned. She indicated that from the R200bn guaranteed loan scheme, banks had distributed only R15bn to small businesses.

“The devastation in the economy is severe, but the impact is felt worst in small businesses,” said Ntshavheni.

She said they were hoping they would fix small businesses as the economy continued to open.

“We are determined to act in a way to bring a level of certainty in the SMME (small, medium and micro enterprises) sector in the informal economy… and the township economy,” she said.

ANC MP Mohammed Dangor also raised concern that the banks had only distributed R15bn.

Dangor said the issue needed to be addressed because most small businesses had been affected.

Ntshavheni said black businesses had been at the receiving end of not getting the necessary support from banks. She said most of the businesses that received funding from the R15bn from banks were white-owned.

Deputy chairperson of the NCOP, Sylvia Lucas, said she hoped most of the actions would be followed through by the government to help small businesses in trouble.

NCOP chairperson Amos Masondo said most small businesses employed a considerable numbe of people.

Ntshavheni said they need to get banks to help small businesses, particularly black businesses.

She said she noted the concern raised by Dangor and that National Treasury would have to appear before the select and standing committees of Parliament to explain why banks did not provide financial support to black businesses.

Cosatu told the portfolio committee on small business development in the National Assembly a few weeks ago that they were concerned by the low uptake in the R200bn loan scheme.

It said many small businesses were in distress and needed cash to stay afloat, and claimed banks had introduced tough conditions for access to the funds, which should be relaxed.

The Banking Association of SA told the small business development portfolio committee a week ago that R13.39bn had been distributed to 10 754 businesses by August 15.

It said it had received 40 292 applications and that 39% of them were being assessed.

It said 9% of applications were rejected. This was due to the qualification criteria set by National Treasury and the SA Reserve Bank.