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 responded with indignation, calling it “disgusting”.

However, a subsequent clarification has made it clear the language used around loans being issued to SMEs had confused the issue.

The R1 billion was indeed given as a full donation to the trust and its administrators, and the Rupert family cannot possibly stand to profit from the situation, the administrators have made clear.

The EFF had accused “capital” of using the crisis to “entrap” small and medium enterprises in debt, and the party even went as far as to accuse billionaire Johann Rupert of trying to be a “loan shark” who would plunge SMEs into debt. They called on small and medium businesses (SMEs) to rather turn to government for support, as the money they would receive from the department of small business development would not be in the form of loans.

The Rupert family donated the R1 billion to assist SMEs.

Business Partners will administer the distribution of the funds to the most needy SMEs and the assistance will be in the form of loans to SMEs at very favourable terms.

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”.

Ramaphosa 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”.

SMEs may apply for R250,000 to R1 million in funding from the R1 billion donation the Rupert family made to assist businesses in financial distress as a result of Covid-19, reports Moneyweb.

Business Partners, a subsidiary of Remgro, will administer the process. An online application portal will be launched by the end of the week through which SMEs can apply for assistance.

The Rupert family founded Business Partners in 1981 and it has since been providing a range of funding and related support services to SMEs.

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

David Morobe, the executive general manager for impact investment at Business Partners, explained that assistance would be in the form of a loan, repayable over a period of five years.

“For the first year, applicants will not have to pay interest or instalments, but thereafter they will be expected to do so. We are hoping that the impact of Covid-19 would have receded and the businesses will be able to repay the loans on commercial terms.”

“We are going to look at a number of factors such as the extent of a decline in revenues, while still having to pay overheads such as salaries and rent.”

He said that if applicants could prove without reasonable doubt that their business were in financial distress as a result of Covid-19, due to the lack of flow of goods and services, as customers have been 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

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

Morobe called on other creditors such as banks and landlords to come on board and assist SMEs, and to allow them some breathing space.

Morobe said all funds that SMEs needed repay in terms of the scheme would be reused to assist other distressed SMEs in future – therefore no profits will ever be repaid to the original donor, in this case Rupert.

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