As of 16 January 2021, R17,84 billion in loans had been approved by banks and taken up by small businesses under the Covid-19 Loan Guarantee Scheme.
Demand for the scheme remains significantly below the original expectations and participating banks expect applications for the scheme to slow-down further in the coming months. This is despite an expected increase in financial pressure on small enterprises, especially those in the hotel and tourism sector due to restrictions on their businesses under the adjusted level three lockdown regulations. Based on present trends, it is probable that only R18,9 billion in loans will be approved under the scheme.
However, the Covid-19 Loan Guarantee Scheme on its own cannot address all of the financial and business challenges facing small enterprises, many of which pre-date the pandemic and were caused by a lack of inclusive economic growth and uncertain business conditions. Government will have to implement other business and financial support programmes to ensure small and medium enterprises survive the present crises and can create jobs and spur inclusive economic growth.
As of 16 January 2021, the scheme received 48 366 applications for loans, of which 27% were approved by banks and were taken-up by the applicants. Five percent of the applications are still in the process of being assessed.
The slow pace of economic reform, an unreliable electricity supply and lack of inclusive growth, as well as the subsequent weak consumer and business confidence, has also reduced opportunities for enterprise and the associated need for credit.