If you run a general dealer, traditional grocery store or spaza shop that has taken a knock during lockdown, make sure that you take advantage of funding provided by the Department of Small Business Development to help you get back on your feet.
The Spaza Shop Support scheme allows for your business to access a R3 500 working capital injection (cash) and an additional R3 500 in revolving credit at pre-selected wholesalers. The nature of a revolving credit loan is that it can be borrowed from many times in a row.
“Revolving accounts … allow you to borrow funds over and over again, up to an approved maximum amount,” writes credit expert Michelle Black for creditcardinsider.com. “This max amount, known as your credit limit, is set by your lender. However, you decide how much money you will borrow and how much you will pay back each month.”
In other words, as a spaza shop owner, the department is offering you the ability to access R3 500 worth of goods on credit, and when you pay back the amount, you can access another R3 500 worth.
Minister of Small Business Development Khumbudzo Ntshavheni also says that you have the option of accessing all R7 000 as revolving credit if you choose.
In addition, the scheme will provide your company with business management support — such as basic financial management support (see details below) — over a 24-month period, and assistance with legal compliance — such as help with registering your company, making sure you are tax compliant and making sure you are up to date with the Unemployment Insurance Fund so that you can qualify for participation in the scheme.
To apply for funding
You are eligible to apply if you are a spaza shop or general dealer owner who is a South African and hold a business license or valid trading permit. If you fit these criteria,
- Go to your nearest Nedbank Branch, Nedbank desk at your nearest BOXER store, or your nearest Standard Bank branch for assistance to apply.
- Bring along the following documents:
- A valid South African ID document
- A valid and original municipal trading license/permit to trade or business license in case of a general dealer (copies will not be accepted). Only permits or licenses issued by the municipality, not a councillor are valid
- If you are currently not a registered business, tax compliant or paying the Unemployment Insurance Fund (UIF), you must be willing to accept assistance to do this. The scheme will provide you with assistance.
At the Nedbank or Standard Bank branch or desk, you will be assisted to register on the department’s SMMESA database, and complete the applicable application form.
The terms of funding
Here are the terms you will need to agree with in order to participate:
- To buy products from a basket of goods approved by the department that will change from time to time. The department does this in order to boost sales for South African small businesses
- To operate a business banking account, and be willing to participate in the Small Enterprise Development Agency (SEDA) supported business management support programme. This will include assistance with inventory management and stock control, and the preparation of annual financial statements.
- To uphold health and safety guidelines, including:
- Sanitizing before and after serving each customer
- Disinfecting the service counters
- Maintaining social distancing
- Not selling counterfeit goods and stale/expired foodstuffs;
- Not using trading spaces as sleeping quarters.
Debt is still debt
The department has not indicated whether there will be interest charged on the R3 500 credit, and did not respond to attempts for contact from the Mail & Guardian. But even if the loan is interest-free, it will still need to be paid back, so it should only be taken if you need it to stay afloat in the short term.
Small business finance expert Hennie Stander told the M&G: “Debt will only put a future strain on the cash flow and could result in tremendous financial stress on the owners of the business if they’re not able to recover from the process. Should it, however, become clear that a loan is necessary to get the wagon through the ditch, then companies should look at the department-offered funds as opposed to banks.”
It seems that word about the support scheme has not spread far among those for whom it is intended. The M&G appealed to a Facebook group of 90 spaza shop owners to see if any had accessed or used the funding. Only one person knew anything about the grant. Business owner Nduduzo Mgoza said “most of us have not heard about it” and would be interested in more information.
The government’s second May edition of Vuk’uzenzele said that the department had only received 104 applications to date, of which 88 had been approved for funding.
So, if this funding would be a lifeline for your business, apply as soon as possible, while there is still funding available and the system is not swamped with applicants.
For additional assistance or enquiries, call 0860 663 7867 or e-mail [email protected]