A fraction of businesses succeeded in their applications for relief funding during lockdown, according to the National Small Business Chamber (NSBC).
It said that of the 53% of small businesses that applied for relief funding, a mere 6% were successful. Some of the reasons cited for this low success rate ranged from poor or no response, unnecessary qualifying criteria and lengthy, tedious processes.
Technical faults have been blamed for difficulties in accessing other support.
Both the government and the private sector established financial support measures to soften the blow of the extended lockdown on businesses. The biggest financial relief schemes include new tax measures intended to provide R70 billion in support, followed by the Unemployment Insurance Fund’s (UIF) Temporary Employer/Employees Relief Scheme, geared to provide a further R40 billion in support. Other private initiatives have included the Sukuma Relief Programme, the Solidarity Fund and the South African Future Trust (SAFT), with each receiving between R1 billion to R2,5 Billion in donations.
Glitches on the UIF website led to many people not being able to submit claims.
It has also emerged that existing financial support measures have not proved sufficient in sustaining businesses throughout the crisis.
More than R1 billion was donated to both the SAFT and the Sukuma Relief Programme, but, in each case, the value of applications for loans and relief has exceeded available funds.
According to the South Africa SME Finance Association (SASFA), three quarters of small and micro businesses will shut their doors permanently if the lockdown runs beyond June of this year.
The NSBC also found that 94% of small businesses were either in a cash-flow crisis or would be in one within the next few weeks. Nearly a third of businesses surveyed by Stats SA planned laying off staff in the short-term.
In the medium to long term, IRR analysts argue, much-needed structural reforms are the only way to assure sustainable recovery.
[Picture: Tim Mossholder]