Real reason R500bn Covid-19 relief isn’t getting to business

It’s a truism that banks only lend you money when you don’t need it – and don’t lend it when you do. This was the reminder from property industry leader Brian Azizollahoff, who nearly choked on his cornflakes when he heard this snippet on the daily BizNews Radio Flash Briefing:

According to Reuters, almost a third of the government’s R500bn relief package may end up going unused…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”.

The former CEO of Redefine Properties and co-founder of Propertiq says it’s an “outright lie” that businesses aren’t accessing the relief funds because they don’t want to add to their debt burdens.

The stark reality is that it’s very difficult, and mostly impossible, to access money housed in this package. Banks are not approving applications because the terms aren’t preferable for them. Read his first-hand account of trying to access Covid-19 relief.

PS: Don’t miss the Thursday noon webinar today when Tim Modise will be joined by artists and other stakeholders to discuss the laws and policies that currently govern and constrict the creative industry. Sign up here: https://attendee.gotowebinar.com/register/1324111475714234383.

 

Comments to my inbox

From David:

It is not true that banks only lend you money when you don’t need it. 30 years ago FNB gave my partner and myself R60 000 facilities (real money in those days) to start a commodities trading enterprise. And in the end, the enterprise was most successful. What about all the mortgage loans that banks make every day???

From Gordon:

I don’t think it’s an outright lie, though it may be in his case. We definitely were put off by the fact that the assistance comes in the form of debt, and not aid. The last thing we want to be doing is incurring long term debt at this time, exactly for the reasons stated in your mail…

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