The South African government is partnering with FNB on its bounce-back loan scheme. Aiming to grow the South African economy and create jobs, the scheme provides additional funding to qualifying businesses. Through this article, we will be taking an in-depth dive into FNB bounce-back loans in South Africa.
According to the bank, it has already begun processing applications. It will improve its processes over the next few weeks to ensure customers can access the loans seamlessly across all channels.
“We are offering a loan scheme that is not about emergency financial relief but is about contributing to the growth, development, and resilience of the entire SME sector,” said Gordon Little, chief executive of FNB commercial.
Why FNB launches ‘bounce back’ loans in South Africa
Little explains that the previous Covid-19 assistance loans were restrictive regarding the qualifying criteria. Also, what businesses could use the funding for, this bounce-back loan application process is much simpler. Applicants have no restrictions as to how they can use the budget.
There are only two restrictions; loans cannot be used to repay shareholder loans or settle debt, and entities and sole proprietors must be tax-registered. This privilege allows companies to invest the funds into the aspects of their business that will support its future growth.
FNB said it would prioritize the provision of bounce-back loans. The plan is to make the Scheme a default term lending solution for business clients with an annual turnover of between R0 – R100 million.
According to Little, this decision was taken to demonstrate FNB‘s commitment to leveraging Bounce Back loans as valuable tools for supporting SME growth. “FNB wants South African small businesses to know that we are all in when it comes to supporting and growing their businesses.”
Who can apply for the FNB bounce-back loan in South Africa?
- Any business (with a maximum turnover of R100 million per year) that needs relief for any reason.
- Businesses that are looking to expand and scale.
- A business with a good credit history and no arrears or judgments.
- FNB’s credit application and granting process include a risk assessment and a bank credit application.
What do you get?
The loan options range from a minimum of R10,000 up to a maximum of R10 million. According to FNB, the scheme offers very generous interest rates. Repayment terms are flexible enough to encourage uptake and ensure businesses are not put under financial strain.
Here is what getting an FNB bounce-back loan entails
- Fixed Loan Term – The Bounce Back Business Loan has an amortization period of 60 months;
- Early Settlement – Customers can settle the loan early and pay no penalty fees;
- Automatic Payments – Customers can pay using a debit order from their business account on a date convenient for them;
- Interest Rate – The loan rate is Prime + 3%;
- The loan options range from a minimum of R10,000 to a maximum of R10 million;
- You can only have one active Bounce Back Loan at a time;
- There can be no repayment of existing debt through the loan.
How do businesses access the scheme?
Participating banks will be able to provide Bounce-Back Scheme loans (banks that have opted to use the Scheme for their customers). DFIs and nonbank SME loan providers will be able to access the Bounce-Back Scheme through participating banks. This includes due diligence in compliance with regulatory norms.
The involvement of DFIs and non-bank SME loan providers will be based on financing charges that are subject to the due diligence and regulatory criteria of participating banks.
Do Bounce Back loans have to be repaid?
The Bounce Back Loan Scheme offers fixed-term loans for six years. What’s my repayment schedule? In the first year, businesses do not have to make payments. However, they must return the loan and any interest beyond that time.
How much do I pay back on a bounce-back loan?
There is a variable interest rate of prime plus 3% on the loans. It further said that successful applicants had 60 months to refund the capital with no penalties for paying it early. This loan will work in the same way as FNB’s current business loan but at a reduced interest rate.
Do I need a business bank account for a bounce-back loan?
At least some of the banks offering these loans don’t require you to have a business account with them. Though it can be difficult to get the loans if you don’t have a business account with the relevant bank. Bounce back loans do not affect your eligibility for other government personal support.
Do I need a business bank account for a bounce-back loan?
At least some of the banks offering these loans don’t require you to have a business account with them. However, it can be challenging to get the loans if you don’t have a business account with the relevant bank. Bounce-back loans do not affect your eligibility for other government personal support.
Check out: Everything you need to know about FNB business loans.
Conclusion
The new “bounce back” loan scheme – aimed at helping businesses recover from the pandemic – has finally come into effect. The bounce-back support scheme, as named by the Treasury, will provide additional funding to qualifying businesses to grow the country’s economy and facilitate job creation..