WeeklySA_AdminDIRECT SUPPORT: Nearly R700 million allocated
The sectors that caters for Shisanyamas, fruit and vegetable sellers as well as backyard mechanics stand to benefit hugely from R694 million allocated to assist small and medium enterprises operating in the townships and rural areas.
About 24 000 township and rural enterprises across eight industry-specific programmes will benefit, according to Government’s sponsored Township and Rural Entrepreneurship Progamme called Trep.
More than 90% of the total money allocated will be used to provide direct financial and operational support to entrepreneurs, while the remainder shall be used to cover administrative costs, Trep added in a statement.
Trep is an initiative by the Department of Small Business Development to transform and integrate opportunities in township and rural areas into productive business ventures.
The initiative was founded last year with the focus on creating platforms to provide the business support infrastructure and regulatory environment to enable enterprises to thrive.
Explaining the programme, Khumbudzo Ntshavheni, the Minister of Small Business Development, said Trep is geared to “elevate enterprises in the townships and rural areas previously relegated to the second economy to the mainstream economy, and to further integrate opportunities in townships and rural areas into competitive business ventures.”
The bulk of the allocated funding, about R300 million, will go to motor mechanics, panel beaters and auto fitment centres while shisanyamas, fruit and vegetable sectors will receive R13 million each.
Other businesses to benefit from this windfall will include clothing, textile and leather businesses at R70 million, spaza shops at R150 million, butcheries at R42 million, salons at R36 million and bakeries at R17 million.
Despite a lack of regulation and data to quantify the real value of the burgeoning township and rural economies due to informal trading and a legacy of economic exclusions, Ntshavheni says the government believes that supporting township and rural economies is vital to the country’s recovery from the coronavirus-induced downturn.
Small, medium and micro enterprises, which typify the economy of the country’s densely populated and underdeveloped townships, are estimated to account for at least third of total turnover generated by the country’s formal business sector.
To develop and formalise the sector, which Ntshavheni says many entrepreneurs faces an uphill battle in accessing capital through formal financial institutions, which necessitated government to establish the Small Business Development Ministry in 2014.
To participate in the current scheme, qualifying township or rural entrepreneurs must be South Africans and can apply for support including funding through the common application template from the Seda, Sefa, the National Empowerment Fund or the National Youth Development Agency.
HERE IS HOW THE MONEY WILL BE SPLIT
Autobody repairs and mechanics – R300 million
About 800 motor mechanics, panel beaters, auto fitment centres and auto spares shops targeted. The financial support package for this sector includes:
• Maximum of R500 000 (R400 000 equipment and R100 000 working capital) for motor body repairers, mechanics, auto spares shops and auto fitment centres.
• The R500 000 will be provided by the commercial banks with a guarantee from Sefa.
The programme also offers support in the form of training, business advice, registration and access to market in both the private and public sectors.
Spaza shops – R150 million
About 15 000 “unbanked” enterprises will be targeted.
South African owned and managed spaza shops, holding a valid licence to trade, can apply for the following financial and operational assistance through TREP:
• Access to working capital investment and a revolving credit facility that is backed by the Khula Credit Guarantee Scheme of Sefa in partnership with Nedbank and Standard Bank South Africa (R10 000 grant and R5 000 credit facility)
• Coordinate and support bulk buying on a pre-approved basket of goods and distribution through a list of approved wholesalers (applicants must be willing to participate in the bulk buying scheme).
Clothing, textile and leather – R70 million
About 1 400 entities are targeted by the programme. These include garment makers, patternmakers, designers, pattern calculators, pattern cutters, art designers, knitters, machinists, tanneries, fabric manufacturers, shoemakers and handbag makers.
The financial package offered to entrepreneurs within these sectors includes:
• Maximum of R350 000 towards working capital, cost of equipment or any other capital expenditure (CAPEX) paid directly to supplier.
• The financial package will be offered in the form of a blended finance with 50% of the total approved amount being a grant (maximum grant amount of R50 000).
Successful applicants will have 36 months to repay the loan at a fixed interest rate of 5%. The financial package is only offered to entities which have a turnover of below R1.5 million per annum.
Butcheries – R42 million
About 1 400 township and rural-based butcheries to be targeted. The scheme offers equipment, access to discounted stock – with a predetermined inventory worth R5 000 – and financial support as follows:
• Maximum of R350 000 towards working capital, cost of equipment or any other CAPEX.
• The financial package will be offered in the form of a blended finance with 50% of the total approved amount being a grant (maximum grant amount of R50 000).
• Grant portion is not repayable, but it is not accessible as a stand-alone facility. Applicants qualify for a grant simultaneously with the loan.
Standard loan repayment terms – as applicable to those in the clothing sector – apply to accepted butcheries.
Hairdressers and personal care – R36 million
About 3 000 existing informal and micro-business hairdressers, make-up artists, massage therapists and nail technicians are targeted. Businesses can be based at home or in a salon and may also be mobile. The financial support package includes:
• A blended funding model of 50% portion loan and 50% grant.
• Funding to the maximum of R50 000 per enterprise.
• It covers working capital and cost of equipment.
Standard loan repayment terms apply and, to qualify, the entity needs to have a turnover of less than R1 million per annum. The programme also offers compliance training within the Occupational Health and Safety Act Standards.
Bakeries and confectioneries – R17 million
The target is a total of 1 400 owner-managed micro, home-based and co-operative bakeries and confectioneries. The financial package offered to these enterprises includes:
• Maximum of R350 000 towards working capital, cost of equipment or any other CAPEX.
• The financial package will be offered in the form of a blended finance with 50% of the total approved amount being a grant (maximum grant amount of R50 000).
Standard loan repayment terms apply and applicants will need to have a turnover of less than R1.5 million. Businesses will also need to comply – or be willing to comply – with the minimum bread and confectionery nutritional requirements. The programme offers assistance to businesses looking to acquire an environmental health and food safety certificate.
Fruit and vegetable sellers – R13 million
This amount will be disbursed to 6 500 entities. The financial package includes a R2 000 once-off grant which can be used to purchase discounted stock through producers participating in the programme. Bulk vegetable packages include onions, carrots, beetroot, tomatoes, green beans, potatoes, butternut, spinach, cabbage and peppers. The fruit package includes apples, bananas, oranges, avocadoes, mangoes and peaches.
Shisanyama and cooked food – R13 million
The programme targets about 1 300 informal and micro restaurants which participate in the cooked food industry.
The programme is open to containerised and mobile cooked food outlets, concession stands, food carts, open-air vendors and home-based restaurants. Shisanyamas with a turnover of less than R1.5 million a year may also apply. The financial support package offered to these enterprises includes:
• Maximum of R350 000 towards working capital, cost of equipment or any other CAPEX (paid directly to supplier).
• The financial package will be offered in the form of a blended finance with 50% of the total approved amount being a grant (maximum grant amount of R50 000).
The programme also offers training in the correct handling of food and compliance with environmental health and food safety standards.
Application forms for all of the above sectors can be found on the Small Business Economic Development online portal. All applications for TREP financial assistance including applicable documentation (CIPC certificate, proof of address) must be sent to trep@sefa.org.za.
Additional info – Business Insider SA
