“The Covid-19 pandemic has devastated the South African economy and placed the livelihoods of businesses and employees at stake. Black businesses, which historically have been constrained by the lack of access to affordable capital, have been dealt a particularly heavy blow. That is why the Economic Distress Fund will support black companies in accordance with the legislated mandate of the NEF, to mitigate the challenges that have been caused by the ongoing pandemic. Funding will be in the form of loan and equity and a maximum interest rate of 2.5% will apply,” explains Mthethwa.
Mthethwa adds that the NEF has dedicated teams of seasoned investment professionals comprising Chartered Accountants, engineers, corporate lawyers and various other expertise to help make the Economic Distress Fund a success.
Criteria for funding of between R250 000 and R10 million
NEF General Counsel, Mzi Dayimani, says to access the Economic Distress Fund of between R250,000 and a maximum R10 million, eligible Black businesses must provide proof of commercial viability and must demonstrate the need for economic relief as a result of distress from Covid-19.
Further, applicants must prove that the business is financially distressed by demonstrating the following:
When the Covid-19 pandemic broke out in South Africa in March 2020, the dtic entrusted the NEF with an allocation of R200 million to establish a Covid-19 Black Business Fund that would support the manufacture of essential healthcare products and the production of priority food items that were in short supply at the time.
By September 2020 the NEF had “approved 33 transactions valued in excess of R207 million, with part of the funding topped up from the NEF’s balance sheet. These businesses manufacture products as diverse as hospital beds, frail care facilities, stretchers, trolleys, surgical masks, personal protective clothing such as bodysuits and isolation gowns. Other products are disinfectants, medical gloves, face shields, safety goggles and shoe covers, non-contact thermometers, plastic moulds, bottles, dispensers, hand sanitizers, detergents and soap, among others. With this track-record we are confident that the new Economic Distress Fund will also be a memorable success,” says Mthethwa.