Did Covid-19 and lockdown impact your business and income?
What was the response of your landlord on the payment of rental? Or the financial institution on the payment of your instalment under a hire purchase agreement? Or the monthly payment to an independent contractor for marketing or other services? If you have not agreed to different terms and conditions, you and the other party may not be contracting on friendly terms anymore. All contracts that may have an impact on possible disputes must be assessed and amended by agreement with the other party.
Where you have lost income and profits due to the lockdown, certain relief can be applied for, in particular SMME’s (that is businesses with turnovers not more than R50m per annum). All businesses who are closed during the lockdown and whose employees contributes to the UIF can apply in terms of the Temporary Employer Relief Scheme aimed at employees who are not working and earning during the lockdown (UIF TERS). Any SMME that meets the qualification requirements and banks with either Absa, Nedbank, Standard Bank or FirstRand Bank can apply for Interest-free loans for the purpose of paying a specified amount of money to their permanent employees who are at risk of losing their jobs or suffering loss of income (The South African Future Trust Employer Relief Fund). Businesses geared to take advantage of supply opportunities resulting from the Coronavirus pandemic or shortage of goods in the local market, can apply for Business Growth and Resilience Facility, while others can apply for debt relief from the Department of Small Business Development.
Tourism Relief Fund for SMME’s to ensure sustainability during and post the lockdown period, limited to R50 000 can be applied for, including restaurants. Distressed small scale farmers can apply for relief at the Department of Agriculture. The Sukuma Relief Fund has been closed as applications oversubscribed the available funds, and lastly applications can be submitted to the Solidarity Fund.
Deferral of PAYE payments to SARS, extension of Employment Tax Incentives are amongst the tax relief that are available from SARS.
Most of the lockdown regulations issued by various government departments carry a penalty for non-compliance. Do you know how the regulations affect your business? What can you do and what not. Interpretation and advice on how the regulations are to be applied to your business activities are therefore vital.
Looking at the future, we are all expecting a ‘’new normal’’, although we do not really know what lies ahead. One area which businesses and companies need to consider, is whether to close-down because of financial losses sustained and continuing expenses during lockdown with no turnover. A better solution would be to consider a merger with another company or business, thereby creating a stronger, bigger more resilient business that could withstand any future pandemic and financial crisis and adapting to a new economic environment.
Mergers will allow both the weak and strong company to survive, to keep their staff and ensure a future for all, instead of one going under and people losing their jobs and income. First of all, a legal process is required for the merger, including the right structuring thereof to avoid capital gains tax and possible transfer taxes, the take-over of existing contracts, possible intellectual property rights, staff, stock and machinery. A network of experts is available to make sure that the merger is implemented smoothly and effectively. This solution is available to small, medium and large companies. Also, the solution could be to acquire another business, by purchasing it or the shares in the company owning the business. We believe that it is now a perfect time to consider mergers and acquisitions of businesses and companies.
We are moving into an era where your business needs to know what your customer wants, and it will be a time to stand and work together. We are there to share our insights and knowledge to other businesses, and trust that they will become open to new ideas, new concepts, and getting rid of resistance to change. Businesses should all start to invest in other income streams as well, even multiple income streams, that could sustain then even during a pandemic and financial crisis.
