Debt Rescue welcomes payment reprieve for small businesses
Debt counselling company Debt Rescue has welcomed the decision by some few banks to give small businesses economic reprieve amid the COVID-19 Coronavirus outbreak.
On Sunday Standard Bank announced a payment holiday for its student and small business loan clients on all up-to-date loans from 1 April 2020 to 30 June 2020.
Nedbank has followed suit with a similar offer to some of its clients.
Debt Rescue CEO, Neil Roets says this form of relief will go a long way, especially for small businesses.
"This is a very good thing because small businesses are really struggling during these times. Most businesses cannot survive - even if you take away two weeks of consecutive income, of those businesses, they cannot survive," says Roets.
"It goes without saying that businesses with loans at the banks would be in a very difficult position now to pay those loans and it's almost going to be impossible because one thing that doesn't go away in these difficult times and when they do not receive income is the fact that they still have their expenses."
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The bank says it is undertaking to work alongside and support clients with suitable individual solutions to cash flow challenges that they may experience as a result of COVID-19 extends to any loan agreement that clients might have with the bank.
But Roets also warns that business owners must have a backup plan for the day banks come back to claim what is due to them.
"We don't feel that there's any catch in these credit providers giving payment holidays to their clients, but it will be a harsh reality come 1st of July and these businesses have to start paying bank these loans."
"Also, the reality is that it's only a payment holiday. These amounts are not written off in any way or form, so it had to be recovered in some way by the bank," he notes.
Meanwhile, Roets says President Cyril Ramaphosa's address to the nation on Monday evening will be a deciding factor for how the rest of South Africa reacts to the crisis.