Rupert’s R1bn for Covid-19 turns out to be a loan, and the EFF are ‘disgusted’

After it was reported on Tuesday that the financial commitment offered by the Rupert family that President Cyril Ramaphosa announced during his 21-lockdown speech last week was, in fact, a loan, the EFF has responded with indignation.

They accused “capitalists and captains of industry” of trying to profit from the Covid-19 pandemic, calling it “disgusting”.

They incorrectly said that the money pledged by the Rupert and Oppenheimer family had been announced as “donations”, and accused “capital” of using the crisis to “entrap” small and medium enterprises in debt.

The party accused billionaire Johann Rupert of trying to be a “loan shark” who would plunge SMEs into debt, and they called on small and medium businesses (SMEs) to rather turn to the government for support, as the money they would receive from the department of small business development would not be in the form of a loan.

EFF Statement on Exploitative Loans from Johann Rupert Disguised as Donations Towards COVID-19 pic.twitter.com/Tf9Ojo4m8X

— Economic Freedom Fighters (@EFFSouthAfrica) March 31, 2020

When announcing the 21-day lockdown last week, Ramaphosa had said that “to get things moving, government is providing seed capital of R150 million and the private sector has already pledged to support this fund with financial contributions in the coming period”.

He said “we must applaud the commitment made in this time of crisis by the Rupert and Oppenheimer families of R1 billion each to assist small businesses and their employees affected by the coronavirus pandemic”.

Although some outlets reported this commitment as a “donation” that was never the actual language used by the president.

Small and medium enterprises may apply for funding from R250,000 to R1 million for the 60-month loan if they can prove that their business is in financial distress as a result of Covid-19, reports Moneyweb.

On Sunday evening, Business Partners announced they would be administering the R1 billion loan by the Rupert family and small business may apply for it by the end the week.

However, what has been confusing entrepreneurs is whether or not the donation is a loan or donation.

As Business Partners managing director Ben Bierman said on Sunday: “We expect to make an announcement regarding the criteria, repayment terms and how to apply for the finance this week.”

Speaking to Moneyweb, David Morobe, the executive general manager for impact investment at Business Partners, gave much-needed clarity on the money.

He explained that, for the first year, applicants would not be charged interest for instalments, but thereafter they would be expected to do so.

“We are hoping that by that time, the impact of Covid-19 would have tempered of society, but thereafter we want to go to commercial terms of assisting our small and medium enterprises,” said Morobe.

He said making the financial commitment a loan and partly a grant was the most sustainable thing to do.

“We devised how to do that in a sustainable manner which is a partial grant and part loan to some of the small and medium enterprises.

“Some of the loans will be given on favourable terms to make them as cost-effective as possible so that they ride the impact of the pandemic that is unfolding at the moment,” says Morobe.

He said that if applicants can prove without reasonable doubt that their business are in financial distress as a result of Covid-19, due to the lack of flow of goods and services, as customers are in a lockdown, they need to meet the following criteria and present the following documents:

• Must be South African owned
• BE an SME
• Must be tax compliant
• Show annual financial statements
• Show three-month bank statement
• Proof of employees that may be assisted
• Rent statement
• Supporting documentation/letter stating how your business is in distress as a result of Covid-19

“We are going to look at a number of factors from the applicants where we try to determine the present points and where they can prove to us that this was a result of the Covid-19 pandemic.

“So if you are a small business and can give us some documents that your business has been deteriorating as a result of Covid-19, we will consider your application,” said Morobe.

He urge that if SMEs did not receive the necessary financial assistance now, their chances of failure in the future would be high.

“If that business is not assisted now, the chances of it dying now are very high. So that is why we are trying to mitigate the risk,” said Morobe.

There would be no financial assistance to businesses in primary agriculture and mining, and non-profit organisations.

Why not let the government administer the fund?

“It is an implementation channel that the patrons decided to use because Business Partners has been around for 39 years and it has proven systems and proper governance to deliver these funds.

“Government has got its own challenges in disbursing funds to small and medium enterprises and I think it has been said for a long time about late payments to SMEs,” added Morobe.