The Bounce Back Support Scheme, a loan guarantee mechanism of R15 billion which was first highlighted in the February 2022 budget speech, has come into effect in April 2022. The scheme aims to facilitate job creation and economic growth in the wake of shocks such as the Covid-19 lockdowns, the July 2021 civil unrest in Kwa-Zulu Natal and Gauteng, and the ongoing flood disaster.
The scheme will provide loans to businesses with a maximum turnover of R100 million per annum, and has built on lessons learnt from the 2020 Covid-19 Loan Guarantee Scheme to provide for greater take-up of Development Finance Institutions (DFIs) and non-bank Small and Medium Enterprise (SME) finance providers. A complimentary equity linked tool of R5 billion is also expected to be introduced later this year, facilitated by National Treasury and DFI’s.
The maximum loan amount will be set at R10 million per businesses, and a minimum loan amount of R10 000, granted at a preferential capped rate (repo plus 6.5%). In the case of small and medium enterprises, non-bank lenders can provide for a maximum amount of R100 million per non-bank lender subject to the approval of the lender. The loans will be accessible through participating banks, who will also facilitate access to loans from DFIs and non-bank SME finance providers in order to perform due diligence in accordance with regulatory standards.
Loans are required to be repaid over a period of up to five years, after any deferred interest period agreed to by the lenders. In the event of businesses being initially unable to make repayments, lenders will also have discretion over any rescheduling options for up to ten years from the first draw down. Government and lenders are sharing the risk of non-repayment of these loans with government taking the first 20.5% of losses.