Finance Minister Enoch Godongwana on Wednesday announced that a new R20 billion business bounce-back scheme will come into effect in March to support small-to-medium enterprises (SME) that have suffered distress due to the COVID-19 pandemic.
The finance minister announced the scheme which will include a business equity-linked loan guarantee scheme, during his maiden budget speech in Parliament on Wednesday.
“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…” says Godongwana.
He added saying, “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, has been loosened.”
Business reacts to the Budget Speech:
Markets, businesses welcome Budget Speech
Markets and businesses have welcomed Finance Minister Enoch Godongwana’s budget that provides personal income tax relief and reduced the tax burden on corporates.
It also reprioritised government spending and committed to reducing the government’s salary bill and shifting allocations towards goods and services aimed at improving service delivery.
Spending on infrastructure like roads, rails, and ports has also been increased.
Minister Enock Godongwana delivers the Budget Speech in Parliament:
Godongwana’s budget speech has provided tax relief to the tune of R5.2 billion. The Minister said this is to help support the economic recovery, provide some respite from fuel tax increases as well as boost incentives for youth unemployment.
He said the tax relief on Personal Income Tax and Corporate Taxes is to counter the effects of the inflation rate.
He has increased the tax threshold of taxpayers for this financial year. People below the age of 65 years will only pay tax if they are earning R91 250.
While only those between the ages of 65 and 74 years earning R141 250 will be taxed, and 75 years and older must earn R157 900 to be taxed.
“Madam Speaker, households and businesses are still under financial pressure and are coping with higher obligations, the effects of COVID-19 and increased fuel prices, now is not the time to increase taxes and put the recovery at risk accordingly. We have decided to keep money in the pockets of South Africans,” says the Minister.