How to get financial help during lockdown

According to the South African Reserve Bank, the coronavirus pandemic could lead to thousands of jobs losses in 2020. 

“Preliminary estimates suggest South Africa could lose about 370,000 jobs this year, on a net basis, with business insolvencies increasing by roughly 1,600 firms as the economy contracts," it said in a statement. 

Government and several financial institutions have come up with relief measures to ensure that South Africans whose incomes have been affected by the lockdown can still survive.

READ: 'DrD' talks lockdown finances and SA economy with David Shapiro

Businesses

The government has initiated tax breaks for companies. 

It has also set up The Debt Relief Finance Scheme for small businesses negatively affected - directly or indirectly - by the Coronavirus pandemic. 

Another government programme set to help businesses is the Business Growth/Resilience Facility.

Families/ Individuals

For families that are struggling to make ends meet, the government has set up the Social Relief of Distress programme. Affected families will receive food parcels or vouchers that will enable them to buy food. 

To qualify for the food parcels, you must show that you are unable to meet your family's most basic needs.

READ: KZN residents want essential goods list expanded

Payment holidays

Banks have also come up with relief measures. They are offering payment holidays for their clients.

 Clive Eggers, the Head of Investments at GTC, says payment holidays are a good initiative for those in desperate need. 

“If you need help and the banks are offering help, why not take it. Don’t wait for the bank. Get in touch with the bank and let them know. Ask if they are offering any form of assistance,” he says. 

However, Clive warns those who are not financially affected by the lockdown should not skip payments or avoid paying their debts.  

He says banks will offer help based on individual cases.

“You have to make sure you fit the criteria that the bank requires because it is not just a blanket that everyone can forget about paying their debts. If you can show that your income or your circumstance have been impacted by the COVID-19, and you give proof, you can talk about debt relief.” 

Clive says people should understand that the banks are doing this because it makes financial sense.

“Banks aren’t charities, so they are not doing this just because they want to be good citizens or corporate citizens, they are doing this because it makes business sense," he says. 

Clive adds that banks have realised that if they apply the normal principles such as blacklisting people or writing off a loan as a bad debt or taking people’s assets, that won't be in their best interest because they would have to do that on a large scale.

"It is just not one or two people, it is right across the whole country.  It is not the people’s fault. This is not because people overspent or something like that, but an unforeseen event, so they have tried to make assistance available,” he says. 

However, Clive says those who are still able to pay should continue because the debt will still remain.

“It doesn’t mean your debt is going away. It is just that they are changing the terms; they are easing the payments of it." 

Speak to a financial advisor before making big decisions about your finances, such as taking a payment holiday. Do your research and make sure you are fully aware of the terms and conditions.

Image courtesy of iStock/ @zimmytws