Covid-19 loan scheme extended by three months

Consultations have seen the Covid-19 Loan Guarantee Scheme (LGS) extended by a further three months.

The move was announced on Monday in a joint statement by the National Treasury, the South African Reserve Bank (SARB) and the Banking Association South Africa (BASA).

The scheme was announced in April last year by President Cyril Ramaphosa as part of the Economic Stimulus Package and was designed to support small businesses that were experiencing financial distress as a result of the Covid-19 pandemic.

In the statement, the Treasury, SARB and BASA said, as at 27 March 2021, banks had approved 14 827 in loans to the value of R18.16 billion.

“The total number of loan applications received since the beginning of 2021 to 27 March 2021 is 1 787. Of these, banks approved 511 applications, of which only 97 were taken up by clients,” they said.

They said end of the Availability Period (the period for drawdown of loans) was 11 April 2021 for most participating banks under the guarantee scheme.

“After further consultation, the National Treasury, the SARB and the BASA have agreed to extend the deadline by three months to 11 July 2021, and in the process to harmonise this deadline for all participating banks. The guarantee scheme will continue to service all loans advanced up to the extended date, for up to five years,” reads the statement.

The further extension of three months would enable an orderly winding down of the scheme and allow those businesses who have applications already lodged to be assessed, they said.