In light of the constraints put upon the tourism and hospitality sectors in order to flatten the curve of the spread of COVID-19, the Department for Tourism has been granted an additional R200 million to assist Small, Medium and Micro-sized Enterprises (SMMEs) in these sectors. This relief is provided in addition to the other support opportunities that non tourism specific SMMEs can take advantage of.
The Tourism Relief Fund will be allocated to SMMEs across all 9 provinces and various tourism sub-sectors, providing a once off grant of up to R50,000 per company. To be considered, an application must be submitted by 31 May 2020. A degree of preference will be given in favour of rural areas, townships, women, young people and people with disabilities.
Funding will be balanced between both businesses which are supported by programs, such as the tourism incentive program, and businesses that are not benefiting from any programs. This will be done via the prospective application process.
Businesses can apply if they fall into one of the following categories:
- Accommodation: Hotels; Resort properties and Bed and Breakfast (B&B’s)
- Hospitality and Related Services: Restaurants (not attached to hotels); Conference (not attached to hotels), Professional catering; Attractions
- Travel and Related Services: Tour operators; Travel agents; Tourist guides; Car rental companies; and Coach Operators.
In order to be eligible to apply for funding, the following criteria must be met:
- Formally registered business with Companies and Intellectual Property Commission (CIPC).
- Turnover must be below R2.5 million per year.
- Have a valid tax clearance certificate or PIN.
- Proof of minimum wage compliance.
- Provide proof of UIF registration for employees employed by the business.
- Be an existing tourism-specific establishment as outlined in the scope of application; this being falling within the sub-sectors of Accommodation Establishments, Hospitality and Travel Related services, as mentioned above (suppliers and intermediaries are not eligible).
- Must be in existence for at least one business financial year.
- Prove that the relief is required as a result of the impact of COVID-19.
- Must submit statements of financial position; this can be done via balance sheet, income statements, cash flow statements.
- 6 months’ bank statements need to be submitted.
- Indicate the intended use of the grant.
How to Apply
The application process can be done by following the following steps:
- Go to tourism.gov.za
- Either complete the application form on the website, or download the application form and complete it. *Every section of the application form must be completed in order to be considered.
- If you have completed the application online, you must provide send the supporting documents via email; or alternatively if you have downloaded the application form, send this along with the specified documents to firstname.lastname@example.org
- You will receive an automated response
Alongside the application form, here is a list from 14 April of documents required:
· Registrations certificate issued by CIPC
· Certified ID copies of the Directors/Members
· 6 months banks statements
· Latest annual financial statements – income, cash flow and financial position
· Business profile, being 2-5 pages maximum
· Relevant industry certification – depending on business focus area
· Latest UIF/U-filing contribution certificate
· Tax clearance certificate or pin
· Proof of compliance with minimum wage requirements
· Grading certificate or proof of application to be graded
· Certificate of B-BEE or Affidavit
· Proof of UIF registration for employees employed by the business
· Medical certificate for persons with disabilities where applicable
Upon submission, the Department of Tourism aims to process each application within 30 working days and successful applications should receive funds within 7 working days after approval. This relief is only available to South African citizens.
Should you have any further queries there is a dedicated line provided by the Tourism Services call centre on 0860 868747. Additional information can also be found on the Department for Tourism web page, or the South African Tourism site.
Support for Industrial Sector Businesses
IDC COVID-19 Essential Supplies Intervention
In Ebrahim Patel’s speech on behalf of the Department of Trade, Industry and Competition, he mentioned a package of more than R3 million to help aid the industrial sector. This package, put together by the Industrial Development Corporation (IDC) is aimed at addressing the situation of vulnerable firms and to fast-track financing for companies critical to the efforts to fight the virus and its economic impact.
If your company has been effected in one of the following ways, you could apply for funding:
- Supply chain interruptions ?
- Access to raw materials – cost and quality ?
- Access to markets – perishable products lost in transit due to longer delivery periods?
- Working capital disruptions – longer lead times ?
- Market loss – e.g. export markets constrained by logistics or replaced by production
- Surge of imports to address the spike in demand?
- Underperforming budgets – impact of extended downtime ?
- Reduced Productivity – employees wellbeing: physical and psychological ?
Working Capital Support
R700 million has been earmarked to suppliers of identified critical goods that are affected by the outbreak of COVID-19. Funding will be provided to companies for the acquisition and/or manufacturing of essential supplies on an urgent basis. A list of the relevant supplies to date is listed here for ease of reference:
- Bulk supplies of disinfectants and sanitizers;
- Accredited masks;
- Accredited test-kits;
- Medical Gloves;
- Packaging (bottles, caps, pumps, sachets etc);
- Sanitisers (hand or industrial);
- Toilet Paper, Wipes, Tissue Paper, Sanitary Pads;
- Cleaning materials;
- Approved drugs;
- Ventilators and filters;
- Nebulisers and nebulising agents;
- Hospital beds;
- Safety Visors;
- Raw materials to manufacture essential products;
- Urgent regulatory and compliance testing of products or treatments if required.
- Products for care of babies and toddlers;
- Personal toiletries, including haircare, body and face wash, roll-ons, deodorants, toothpaste
Even if the items your company produces is not on the list, it may be in the future as the list is constantly being updated. Alternatively, if your company has a track record of making comparable products, then you may still be able to secure funding, provided that your company is capable of delivering on the contract in terms of capacity, resources and experience.
A useful page for sector specific support, post investment support and the IDC’s corporate social investments can be found here.
What Funding is Available?
There are various forms of funding available under the scheme, but each is limited to a 3 month term. Examples of the instruments available include:
- Short term loan for once off- contract or import funding
- Revolving Credit Facility
- Guarantees to banks for banking facilities, imports, ordering requirements
IDC loans are made at a rate of prime +1% and Manufacturing Competitiveness Enhancement Program (MCEP) loans are available at prime +2.5%. Guarantees are made at a flat rate of 2%.
To reiterate, applications can be made on the IDC website, here.
Make sure you read: The Pitfalls of Turnover Tax