National Treasury Loan guarantee scheme media statement

Posted on Wednesday, 29 July 2020  186 Views

The Covid-19 Loan Guarantee Scheme was set up to help ease some pressure off qualifying businesses negatively affected by low economic activity following the global lockdown imposed to reduce the spread of COVID-19. It has been reviewed to make it easier to access. Some of the changes include that bank credit assessments and loan approvals will be more discretionary and less restrictive, in line with the objectives of the scheme. In addition, clients are now being able to access the loan over a longer period. The Covid-19 Loan Guarantee Scheme provides loans, substantially guaranteed by government but with some of the risk shared by banks, to eligible businesses to assist them during the COVID-19 pandemic. Funds borrowed from this scheme, through their banks, can be used for operational expenses, such as salaries, rent and lease agreements and contracts with suppliers. The loans are granted at a preferential rate (prime) and repayment may be deferred for a maximum of one year after taking out the loan. Businesses will then be required to repay the loan over five years. Government and commercial banks are sharing the risk of non-repayment of these loans. The National Treasury initially provided a R100 billion guarantee to participating banks through the South African Reserve Bank, with the option to extend the scheme to R200 billion if required. Government is engaging with non-bank lenders in order to possibly extend the scheme.

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Loan guarantee scheme media statement
Loan guarantee scheme FAQ

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