As announced by the President, National Treasury, the South African Reserve Bank and commercial banks have jointly created a guaranteed loan scheme. The purpose of this scheme is to help small and medium-sized businesses and the economy.
In terms of this scheme, R200 billion will be ultimately made available for new loans to existing customers. The initial phase will be R100 billion.
The key features of the COVID-19 loan guarantee scheme are:
The scheme works on the principle that profits and losses are ultimately shared between government and the banks. The scheme will receive all ‘profits’ on the loans, i.e. the difference between the rate at which banks lend the money (together with limited costs). This will include a guarantee fee charged to the banks in relation to the scheme. These profits will be used to offset any losses that the scheme makes. If the scheme suffers any further losses, these will be absorbed by the banks themselves, capped at 6 per cent of the size of the loan. Any further losses will ultimately be covered by the fiscus.
Please contact your bank for further details and eligibility criteria.
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