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How SMEs can access relief packages

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According to a recent survey done by Retail Capital, 69,8% of local small and medium enterprises (SMEs) are closed as a result of the national lockdown, with 85% reporting a decreased turnover. As such, the South African Government, big businesses and civil society have recognised the impact that COVID-19 is having on local small businesses and have implemented a host of relief packages.

To help SMEs take advantage of these packages, Nadine Chetty, co-founder at E-comm Accounting Solutions and Intuit QuickBooks trainer, says that there are two important steps that business owners can take in order to access most of these relief measures. “Firstly, small businesses need to be tax compliant. If they are compliant, business owners need to register on www.smmesa.gov.za to take advantage of these opportunities.”

Tax compliance means business owners must have a valid tax clearance certificate, as well as management statements and annual financial statements. “If you don’t have these, you will need to get them up to date as soon as possible,” she says.

Although compliance is not always an SME owner’s first concern, the current situation shows the importance of this, Chetty adds.  “In order to remain compliant it is vital that management statements and annual financial statements are up to date. As such, it is advisable that business owners utilise the  help of an accountant or financial advisor.”

Chetty points out that accountants and financial advisors are still able to operate during a lockdown. She says that for example,  in her practice they are able to still keep their clients SARS compliant even during this time by using Cloud Accounting Software like QuickBooks Online which allows them to work with their SME clients from anywhere at any time. “It is key that small and medium-sized business owners take this time to focus on their business’s finances and admin, which is often forgotten as most business owners focus most of their attention on running their companies.”

In order to assist small business owners that are tax compliant, Chetty has compiled a list of relief and funding options and outlined some key ones below:

  1. Debt Relief Finance Scheme & Business Growth/Resilience Facility: Administered by the Department of Small Business Development, this Scheme is to benefit SMEs that are negatively affected by COVID-19 and to mitigate against the knock-on effect of job losses. The fund is to the total value of R 500 000 000 which will be disbursed to  businesses registered with the CIPC as at 28 February 2020. The business must be 100% South African citizen-owned with an employee base of 70% South African citizens. Priority for funding will be given to businesses owned by women, youth and people with disabilities. Apply at www.mybindu.org.za

 

  1. SAFT – SA Future Trust: This provides support to employees of SMEs who are at risk of losing their jobs or who will suffer loss of income due to COVID-19. This fund was made possible by the Oppenheimer R 1 billion relief fund and is in the form of a 5-year 0% interest-free loan where businesses will receive R 750 per week per employee for 15 weeks. This is available to businesses with an annual turnover below R 25 million and that have been trading for 24 months. Please note that the business must have been sustainable on 29 February 2020. The business owner must also be an ABSA, FNB, Nedbank or Standard Bank client and they can register directly with these banks.
  2. COVID-19 Temporary Employer/Employee Relief Scheme (TERS): This fund’s purpose is the replacement of lost income to employees during temporary closure of business and for employees on quarantine. It is administered by National Disaster Benefit and UIF for businesses registered with UIF. The salary benefits will be capped to a maximum amount of R 17 712 per month per employee and will be paid in terms of the income replacement sliding scale (38% to 60%) as provided in the UI Act. The employer must apply at covid19ters@labour.gov.za
  1. Tax Relief Measures: The Employment Tax Incentive has been expanded to include all employees earning below R 6,500 pm with a subsidy of an additional R 500, bringing the total ETI claimable up to R 1,500 per employee per month. Businesses with a turnover of under R 50 million will be allowed to delay their PAYE tax payments over the next four months and their provisional tax payments over the next six months without incurring penalties.

The current situation has fostered a spirit of generosity in our society that gives everyone hope for now, and going forward. Chetty urged SMEs to take advantage of these relief measures to ensure a stable future for them and their employees.

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