The finance minister, Enoch Godongwana, has given some hope to SMEs in the National Budget Speech. There are a few supportive measures that have been provided to navigate these challenging economic conditions.
- Energy – with the planned Eskom debt takeover, businesses are looking forward to having less load shedding as the resources which would have gone to servicing debt will now be used to focus on the maintenance of Eskom infrastructure.
This will help SMEs to improve their bottom line as less load shedding means more revenue and less costs on running an alternative energy solution like a generator running off fuel.
- Bounce Back Loan Guarantee Scheme – the changes to the scheme are welcomed as SMEs will be able to finance their solar power needs on the back of a government guarantee. All solar-related loans are guaranteed on a 20 per cent of first-loss basis. The scheme will be launch in April 2023.
Revenue collection – the zero increases in corporate tax, personal income tax, VAT, fuel levy, and road accident fund levy will go a long way to help ease cash flow pressure on businesses as the economy continues to struggle. Furthermore, the ability to reduce taxable income by 125 per cent of the cost of investment in renewables over the next two years is an incentive most SMEs will consider seriously.
· Infrastructure Investment – the projected R903 billion to be spent on infrastructure like roads, power plants and water supply initiatives, amongst other projects, creates vast opportunities for SMEs. We suggest that SMEs get their houses in order especially with regards to admin and governance required admin. This is to avoid missing out on any opportunities because not having a tax clearance is not favourable.
SMEs have had to navigate challenging economic conditions over the last 18 months with worsening load shedding and the increasing interest rate environment. Having the necessary government support to stimulate the economy is key to survival.
Written By Palesa Mabasa, Business Development Head: SME Funding at FNB
