FEDHASA has welcomed Finance Minister, Enoch Godongwana’s announcement on the launch of Government’s Business bounce-back scheme, announced in his budget speech on 23 February 2022.
The scheme aimed at supporting businesses in distress owing to the COVID-19 pandemic is especially welcomed by the hospitality industry as it can potentially offer SMEs in the sector greater financial security as the industry continues with its recovery efforts.
The scheme will use two mechanisms that will be introduced sequentially.
Firstly, small business loan guarantees of R15-billion will be facilitated through participating banks and development finance institutions. This allows access for qualifying non-bank small and medium loan providers.
The Minister said government will partner with loan providers by underwriting the first 20% of losses for banks and other eligible small and medium loan providers.
The eligibility criteria, including the requirement for collateral, have been loosened. This mechanism will be launched and operational in March.
Secondly, by April, Treasury intends to introduce a business equity-linked loan guarantee support mechanism.
Government aims to bring the total support package through the bounce-back scheme to R20-billion.
Further details of the equity-linked guarantee mechanism will be provided soon.
Corporate Income Tax Restructuring
The announcement by the minister on corporate income tax restructuring is also applauded.
The minister confirmed, that as announced in the 2021 Budget, the corporate income tax rate will be reduced from 28 per cent to 27 per cent, for companies with years of assessment ending on or after 31 March 2023.
This will be complemented by base-broadening measures to ensure there is no negative impact on revenue. The minister added that the corporate income tax system is an important part of government’s efforts to create a conducive environment for businesses to grow, increase investment and employ more people.
To read the Minister’s full speech, click here. For a summary of key highlights from the Budget speech, click here.
