DA calls for loan payment 'holiday' for SMMEs affected by coronavirus

The DA is proposing a loan payment 'holiday' of four months to help offset the coronavirus pandemic.
The DA is proposing a loan payment 'holiday' of four months to help offset the coronavirus pandemic.

The Democratic Alliance (DA) wants banks and other financial institutions to freeze loan repayments by small businesses by at least four months as part of its proposed measures to mitigate the impact of coronavirus on the economy.

The party governing the Western Cape has also suggested that small, medium and micro- enterprises be excused by their landlords from paying rent for their businesses.

The DA announced their proposals on Tuesday, saying the coronavirus pandemic would have a devastating impact on the already ailing economy.

It argued that their drastic measures needed to be introduced to cushion the economy from further harm.

“For the economic survival of businesses and families, we're proposing a nationwide four- month payment holiday on loans — in particular property loans, business loans and vehicle loans,” said the DA's spokesperson on finance, Geordin Hill-Lewis.

“By extending the terms of these loans by four months and allowing borrowers to pause their payments for those months, businesses and families will receive immediate and very significant financial relief.

“This will help small business maintain the cash flow necessary to stay open and keep paying their employees. It also acts as a form of bridging finance for these companies during the difficult months ahead.

“Instead of waiting for the flood of requests to come in [from small businesses], government, banks and the Reserve Bank should act proactively now to announce these relaxed payment terms. This has fast become the preferred intervention of governments across the globe. Already this programme is being rolled out in China, France, Italy, the United Kingdom, most of the Gulf countries and Canada.”

DA interim leader John Steenhuisen said the party would be tabling its proposals before President Cyril Ramaphosa on Wednesday morning in Cape Town, when he is due to meet political parties represented in parliament.

The DA said it would also suggest to Ramaphosa and finance minister Tito Mboweni that the R16bn that government has set aside as a financial rescue package for SAA be diverted towards programmes aimed at tackling the coronavirus.

Steenhuisen argued that it would be better to use the money to augment public health resources to fight the coronavirus, instead of saving the loss-making SAA, which has been bleeding billions of rand for years.

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