At the top of the week South Africans were left confused.
While the lockdown played a large part in that confusion, it actually stemmed from a statement made by the Business Partners who would administer the R1 billion the Rupert family put aside for small businesses in distress.
Following the statement made by president Cyril Ramaphosa on 24th March, many South Africans believed that the R1 billion from the Rupert family was a donation.
Indeed, the president presented the news of the figure alongside a call for donations to a Solidarity Fund.
But on Sunday managing director for Business Partners, Ben Bierman, said the following, “We expect to make an announcement regarding the criteria, repayment terms and how to apply for the finance this week.”
Immediately that had folks questioning whether the R1 billion was a donation or a loan.
As it turns out, it’s the latter.
Speaking to Moneyweb, executive general manager for Business Partners, David Morobe, clarified the matter.
For the first year, applicants will not be charged interest for the instalments, but thereafter interest will be charged.
“We are hoping 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 enterprise,” Morobe told Moneyweb.
While loans will be granted on “favourable terms to make them as cost effective as possible” there will be criteria businesses need to meet to qualify for a loan.
The loans will range from R250 000 to R1 million and will have terms up to 60 months.
The criteria includes:
- Must be South African owned
- Must be tax compliant
- Annual financial statements
- 3- months 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’re actually stunned at this news for a number of reasons.
While Ramaphosa never mentioned the word “donation” as regards the Rupert family’s money, the statement regarding the money came directly after a call for businesses to donate to the Solidarity Fund.
The second reason we’re stunned is because despite all the reports that the money was a donation, the Rupert family never issued a correction or clarified the matter until this week.
What really irks us however is that in a time of national disaster, the best solution the Rupert family could come up with was loans.
The Rupert family is worth $6.5 billion, making it the fifth richest family on the African continent and the best it could do was offer interest free loans. Apologies, loans without interest on repayments for one year.
It should be added that the loans will not be granted to those in primary agriculture, mining and non-profit organisations.
To find out a week after the fact that what we thought was a donation is actually a loan is incredibly disappointing.
What’s more is to let folks continue to believe that the loans were donations was even worse.
We also have to wonder if offering folks loans, when what they are in desperate need of is financial assistance, without consequences further down the road.
For many the prospect of incurring debt is nightmarish and with the uncertainty of the future, taking up a loan right now may not be a good idea for some.
COVID-19 has thrown the world for a loop, but we hoped that some humanity and common sense would prevail.
Loans to those in desperate need of assistance however, is neither.[Image – CC 0 Pixabay]