The SA government has several financial assistance packages available for COVID-19-affected businesses, but a vast majority of small businesses are excluded because they are not registered with the Companies and Intellectual Properties Commission (CIPC).
Legal expert in the tourism and travel sector, Advocate Louis Nel, believes registration with the CIPC should be reconsidered as a qualifying criterion when small businesses, in particular, apply for financial assistance.
He confirmed to Tourism Update that there was no legal requirement for small businesses, such as owner-run guesthouses or a one-man tour operation, for example, to be registered with the CIPC.
“They need to revisit this CIPC requirement because it’s going to have a major impact on the small business sector,” said Nel, who estimated that close to 50% of SMMEs in the travel and tourism sector would be impacted by this.
The owners of a small privately owned guesthouse in George contacted Tourism Update saying they had been denied access to financial assistance from the Department of Small Business Development as they did not have a CIPC registration number.
“I checked with my accountants and they informed me that as I trade in a partnership (sole proprietor) there is no requirement to be CIPC registered,” said the guesthouse owner, highlighting that she had complied with all the requirements for the SMME Relief Fund – driven by the Department of Small Business Development – apart from having a CIPC registration number.
“Having traded as a four-star guest house for 25 years with turnover well under R2.5 million (€123 000), and offering sustainable employment to my three local South African staff members and their families, I, like so many others, have lost every reservation for the rest of 2020,” she said.
She said she felt hopeful when she read that the government was offering assistance, as she could not afford to pay her staff from her savings. “But not having a CIPC number excludes me.”
The CIPC website states that businesses that wish to interact with government and access certain types of government support are generally required to be registered with the CIPC. However, the site also acknowledges that “for some businesses, such as informal businesses and sole proprietors, there may not be sufficient benefits”.
According to information shared by the Department of Small Business Development via its twitter page, businesses seeking debt relief need to meet the following qualifying criteria:
- Must have been registered with CIPC by at least February 28, 2020
- Company must be 100% owned by South African citizens
- Employees must be 70% South African
- Must be registered with SARS and UIF
- Priority will be given to businesses owned by women, youth and people with disabilities.
To see the full list click here.
Cape Town offers information solution
Amid the uncertainty and bombardment of information, the City of Cape Town has put together an information solution.
“One of the biggest challenges we face currently is misinformation and a lack of clarity. That is why the City of Cape Town’s Department of Enterprise and Investment has set up an information portal on the Invest Cape Town website to assist business and industry during the coronavirus crisis,” said the city’s Mayoral Committee Member for Economic Development and Asset Management, James Vos.
Businesses looking for a breakdown of all lockdown information, including all the information related to government funding available to SMMEs can access this information portal, here.