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South Africa cannot afford to lose its SMEs, says financing expert

As local business relief initiatives such as the COVID-19 Loan Guarantee Scheme come to a close, many small and medium enterprises (SMEs) continue to struggle, with an unfortunate number of businesses’ liquidity eroded by the pandemic and various lockdowns – especially those that operate in the hospitality and tourism industry.

According to Jeremy Lang, General Manager of Business Partners Limited – one of Africa’s leading financiers for small and medium businesses – a survey conducted amongst clients at the onset of the national lockdown in 2020 found that 96% of respondents needed assistance to survive the continued lockdown and its effects. He adds that a study conducted by Stats SA also revealed that 30% of formal businesses surveyed indicated that they were unable to survive a month without turnover, while over half (55%) indicated that they could only survive between one and three months.

Lang notes that while the easing of some lockdown restrictions and opening of many sectors has provided some relief, in order to weather the ongoing storm and stay afloat, many SMEs require working capital to restart their businesses and replenish reserves used to cover fixed overheads. Added to this, with the country’s gross domestic product (GDP) contracting by 7% in 2020, experts are speculating that the economy may take years before reaching pre-COVID levels, which is bound to negatively impact SME turnover further.

He says that, in response to these needs and to help these businesses get back on track, financial institutions have to be creative and innovative in their approach by offering products that are quicker to access with simpler processes driven by technology.

“Most COVID-19 relief programmes were designed to assist businesses to cover fixed overheads. We have found that there is also a growing need amongst our clients to replenish eroded working capital. As a result, we have launched the Restart Capital Fund, designed to assist our existing SME clients to speed up post lockdown recovery and get them back to pre-COVID levels of trading.

“The COVID-19 crisis has forced business owners to restructure and re-invent in the scramble to save their business and retain their staff. Financiers have also developed programmes to ensure that clients have the resources they need to successfully navigate the new COVID-19 world.”

Acknowledging that the pandemic has created extraordinary difficult times for these business owners, Business Partners Limited has continued to support the well-being of their clients as well as the broader SME community. To ensure quick and efficient access to financing it is also important to make sure that SMEs have the necessary financial and compliance information at hand, explains Lang.

“With over R20 billion in finance provided to support business owners in South Africa over the past 40 years, Business Partners Limited has made it possible for South African SMEs to grow, contribute to the local economy and GDP, and most importantly, create jobs.

“As the country navigates its way to economic recovery, we appeal to fellow business financiers in both the public and private sectors to modify their offerings, in order to provide more relief and recovery finance to ensure we can save as many SMEs as possible,” concludes Lang.

About the Author: Jeremy Lang

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Jeremy Lang has been our Regional General Manager since 2013 and was recently appointed to the Board as Executive Director. He is also responsible for the overall management of the Inland Business Unit whose investment activity spreads across Gauteng, Free State, Limpopo, and North West Provinces. He has more than 14 years’ experience in the funding and support of SMEs. Jeremy is our go-to-spokesperson for all things business finance and growth, and business leadership articles.