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- The bounce-back loan-guarantee scheme is being reworked to help small businesses finance renewable energy projects.
- Government will guarantee solar-related loans on a 20% first-loss basis – to encourage commercial banks to finance more projects.
- Commercial banks will also be allowed to borrow directly from the scheme and then lease solar PV equipment to small businesses.
- For more financial news, go to the News24 Business front page.
The government is reworking its bounce-back loan guarantee scheme to support the rollout of renewables for small businesses that want to beat load shedding.
During the tabling of the National Budget on Wednesday, Finance Minister Enoch Godongwana announced that the existing loan guarantee scheme - that was initially designed to help businesses recovering from the Covid-19 pandemic – would be used to incentivise renewable energy and rooftop solar. The Energy Bounce Back Scheme, as it will be known, is to be launched in April 2023.
"Government will guarantee solar-related loans for small and medium enterprises on a 20% first-loss basis," Godongwana said.
This means that government will carry 20% of the loss on defaulted loans, so banks don't have to take the whole loss. This should encourage commercial banks to issue more loans to customers specifically for renewable energy projects.
The amendments to the scheme include allowing commercial banks to borrow directly from the scheme to facilitate the leasing of solar energy equipment to small businesses, as announced by President Cyril Ramaphosa during the State of the Nation Address.
Small businesses installing solar will also be able to borrow finance for working capital, according to the Budget Review document.
