The fund formed to distribute money donated by the Rupert Family and Remgro in 2020 will loan R100 million to struggling restaurants.
The Sukuma Fund, which was formed to distribute R1 billion donated by the Rupert Family and Remgro Limited to support small businesses last year, announced a partnership with the Federated Hospitality Association of Southern Africa (FEDHASA) to try to preserve jobs in the sector.
Now it has decided to direct some of the money left towards struggling restaurants.
"In order to make the maximum impact with the remaining funds, we adapted our approach to partner with industry bodies who understand the specific challenges that their members face. We felt this was the most effective way to make a meaningful impact in helping businesses overcome Covid-19 related challenges," said Sukuma Fund's spokesperson, David Morobe.
A total of R100 million will be allocated to qualifying restaurants to provide rental relief and boost working capital where required.
To qualify, a restaurant must be independent and formally registered. It must also provide evidence of financial solvency, regulatory compliance and future viability, among other things. Furthermore, applicants must be FEDHASA members. But businesses who are not yet FEDHASA members will qualify if they register as members.
Eligible restaurants will receive unsecured interest-bearing loans of between R250 000 and R1 million each, which they'll repay over five years. The interest will be charged at the prime lending rate. But the loans will incur no interest or repayment obligations for the first 12 months.
"From what we have witnessed, the biggest challenge that struggling restaurants still face is meeting their rental payment obligations. While the rental for many of these businesses has been reduced, it remains a major operating cost that many restaurants are still struggling to cover with current cash flow levels," said Morobe.
He added that once the restaurants' rental obligations are met, working capital requirements can be considered for funding.
FEDHASA estimates that nearly 30% of restaurants were forced to close their doors at the height of the lockdown last year. It said even though restrictions have been relaxed, thousands are still struggling to recover and are on the brink of closure.