To trade or not, here’s some expert business advice

Business owners should take a long, cold look at their businesses and decide whether they are viable, or should be closed down.

This is the advice of Brad Mears, CEO of Southern Cross Health and a member of BUSA’s Covid-19 Labour and Health workstreams, speaking on the webinar hosted by the iLembe Chamber of Commerce, Industry and Tourism and The North Coast Courier last Thursday.

Addressing the 240 registered participants from throughout the iLembe district on the Zoom broadcast, Mears said he believed it would take South Africa and the wider world 10 years to recover from the fallout of the coronavirus pandemic.

“As employers, this is a good opportunity for introspection, to see if your business is viable in the future. Take a cold, hard look at your position and decide where your business is going to be in a few years’ time. Is it still going to be here?

“This might be an opportunity for you to close it down now, rather than face a more costly process of closing in the future.

“If you think it is still viable, then you must look at ways to drastically reduce expenses and debt. Talk to your creditors and bank to find ways to restructure payment terms as quickly as you possibly can.”

Mears warned that business owners should not view relief funding as grants, but loans that had to be paid back. If they could not imagine their businesses trading at levels that would allow them to repay the loans, then don’t bother applying.

Mears believed the larger metropolitan centres were at most risk of being locked down longer than outlying districts, a possibility which President Ramaphosa hinted at in his address to the nation last Thursday evening.

Resources were available to businesses, but appeared to be dwindling rapidly.

About half of the R1bn put up by the SA Future Trust, the Oppenheimer family, for loans to businesses exclusively to pay salaries has been used to help more than 4 000 SMMEs with 40 000 employees benefiting.

Qualifying SMMEs will get R750 per qualifying employee per week, over a period of 15 weeks i.e. R11 250 per permanent employee.

Business owners could still approach this fund for interest-free loans, but they should act quickly.

The Sukuma Trust, with R1bn put up by Anton Rupert, had been oversubscribed and had been suspended, so that avenue is no longer available.

Government funding was available through three programmes: two linked to the Unemployment Insurance Fund (UIF), namely UIF for employees and the Covid-19 Temporary Employer-Employee Relief Scheme (TERS), as well as the Small Business Development Programme for business loans.

TERS applies where there is a reduction in work following a temporary closure of a business operation, whether total or partial for the period of the disaster. It applies from March 25 for three months or until the lockdown ends, whichever comes first.

To qualify, the company must be registered with the UIF, must comply with the application procedure for the financial relief scheme and the company’s closure must be directly linked to the Covid-19 pandemic.

Apply online at the labour department website.

The Small Business Development Programme can grant loans for three uses: for companies to supply essential goods to overcome shortages caused by the pandemic, business loans for companies that have been hard hit, and straight loans ranging from R50 000 to R5m.

All details available at smmesa.gov.za.

The speakers warned, however, that the crisis opened the door for unscrupulous operators, so business owners should have a very clear idea of the terms of the various rescue packages that would be on offer shortly.

Addressing the TERS issue, BDO accountancy and business resources company regional director Jaco Nel said the scheme was designed to help employers pay where they have had to lay off staff temporarily.

Companies applied on behalf of employees and the government would pay companies to disburse to staff.

The scheme was available for three months.

Essentially it served as a top-up fund to the normal UIF, so companies could not apply for TERS relief and employees could not apply for UIF simultaneously.

UIF was applicable to employees who had been laid off permanently or temporarily after following the correct labour law requirements.

Employees who were registered for UIF had to apply personally through the labour department website.

Payments were based on 60 percent of normal wage or salary, from a minimum of R2 500 to a maximum R17 700.

Payments would apply for only three months.

Answering questions about who qualified for TERS or UIF relief, Nel said the situation was evolving and not all answers were clear.

Therefore, employers and employees should make applications regardless, and follow up diligently.

“The system is totally inadequate but it is being continually updated, so apply and keep on trying.”

However, employees or domestic workers not registered for UIF before lockdown started could not claim, unless the employer was prepared to back-pay contributions plus a penalty for non-compliance.

iLembe Chamber CEO Cobus Oelofse advised the webinar that information for employers on the Covid-19 crisis and contact details for useful sources was available on the chamber website ilembechamber.co.za/covid-19.

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