President Cyril Ramaphosa on 21 April 2020 announced the Loan Guarantee Scheme (LGS) 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. The LGS was launched by the National Treasury, the South African Reserve Bank and the Banking Association South Africa (BASA) on 12 May 2020.
The end of the Availability Period (the period for draw down of loans) was 11 April 2021 for most participating banks under the guarantee scheme. After further consultation, the National Treasury, the South African Reserve Bank and the BASA have agreed to extend the deadline by three months to 11 July 2021,.
As of 27 March 2021, banks had approved 14 827 in loans to the value of R18,16 billion. The total number of loan applications received from 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.
The National Treasury said it continues to monitor the impact of the COVID-19 pandemic on the economy and jobs, “and recognises the challenges facing both small and large businesses, particularly those in the hardest-hit sectors.”
Further queries on loan applications can be directed to the individual banks, which are administering the scheme.