COVID GRACE

…Covid-19 loan guarantee scheme extended by 3 months

JOHANNESBURG - The Covid-19 loan guarantee scheme will be extended by three months.

The scheme was launched as part of government’s R500 billion stimulus package to support the economy given the impact of the Covid-19 pandemic.

The scheme is based on a partnership between National Treasury, the SA Reserve Bank (SARB) and the Banking Association of South Africa (BASA).

It is meant, specifically, to support struggling businesses. The period for which businesses could draw down loans was to end on April 11, 2021, for most participating banks, read a statement jointly issued by the parties on Monday.

“After further consultation, the National Treasury, the (SARB) and the BASA have agreed to extend the deadline by three months to July 11, 2021, and in the process to harmonise this deadline for all participating banks.

“The guarantee scheme will continue to service all loans advanced up to the extended date, for up to five years. The further extension of three months will enable an orderly winding down of the scheme and allow those businesses who have applications already lodged to be assessed,” the statement read.

Banks had approved about 18 percent or R18 billion out of the R100 billion guarantee, as at March 27. Banks had received more than 1, 700 loan applications and approved less than half (511). Only 97 loans were taken up by clients.

The scheme has been criticised for its stringent conditions, which has led to a poor take-up. However, SARB governor Lesetja Kganyago said that similar schemes had been implemented worldwide and SA’s scheme was performing well by comparison. –