Property doyen Brian Azizollahoff exposes ‘outright lie’ about R500bn business relief

From Brian Azizollahoff*

I read this comment (in BizNews Flash Briefing) with a great deal of dismay, knowing what an outright lie it is.

According to Reuters, almost a third of the government’s R500bn relief package may end up going unused. The loan programme was intended to help shield small businesses from the impact of the pandemic. Conditions were tweaked in July to allow more businesses to qualify and to extend the repayment grace period as few companies had applied for loans. Only R14.5bn was paid out in August, but the National Treasury does not plan to ease scheme criteria any further. It says that the “low uptake of the scheme suggests that businesses don’t want to incur more debt in light of economic uncertainty.”

Having applied for a loan on two occasions from two different banks, we were unsuccessful because it is all but impossible to access the loan assistance. The banks are not receiving applications on the basis the borrower is applying for a loan with a strong surety in the form of the Government (which should make the process very much easier). Instead, one is applying for a normal bank loan subject only to the bank’s normal lending and credit criteria. As usual, the more one requires a loan, the less chance there is of receiving one. Only if you pass the bank’s stringent process will they advance the loan and little or no cognisance is paid to the Government surety.

I can understand this as the bank is taking risk for very little reward and it does not pay them to lend on the basis as set out in the Government backed loan scheme. It pays them to lend funds purely as the bank and to reject applicants who may be in a tight spot due to Covid-19. Why lend at a lower rate and take on exposure to 6% of the debt?

It’s nonsense that the low uptake is because businesses don’t want to incur more debt. It’s the banks who have no interest in lending because this so called “relief package” is of no assistance. In the US, the Government lends funds directly to eligible businesses for 30 years at a preferential rate – NOW THAT’S RELIEF…

My accountant offered a service of assisting clients in making application for the Government-backed loan and he did not have one successful application.

• Brian Azizollahoff  has been active in the property sector for over 30 years. He served as the CEO of Redefine Properties for 8 years and engineered the merger of Redefine, ApexHi Properties and Madison Fund Managers, which created the second largest listed property company in South Africa. A highlight of Brian’s career was a period spent with Olympia & York Developments, the developers of Canary Wharf in London. Brian recently co-founded Propertiq after spending 5 years with Capstone Property Group, a property investment and development company he founded in 2011.

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