Update on Covid-19 loan guarantee scheme

Two out of every three applications for Covid-19 relief loans are being rejected, a sign that desperate entrepreneurs either have no realistic chance of surviving the lockdown or that banks are being too conservative in lending to businesses eligible for relief assistance. This emerged from figures provided on Sunday by the Banking Association SA (Basa). The Covid-19 relief loans were the cornerstone of President Cyril Ramaphosa’s R500bn economic stimulus package designed to help the country recover from the lockdown, which closed vast parts of the economy.The line taken by BASA seems to be that businesses are reluctant to incur more debt. But from what Michael Avery is seeing two thirds of applicants are rejected, so its still a risk tolerance issue from the banks' side. Avery spoke to Bongiwe Kunene, MD of Banking Association of SA, about the reasons behind the schemes underwhelming impact and what was being considered to improve uptake.