JP MORGAN’S R340 MILLION FUNDING FOR SMALL BLACK MANUFACTURERS

One of the biggest barriers to the involvement of enterprising black South Africans in the capital-intensive manufacturing and green economy sectors is often cited as lack of access to capital. JP Morgan, the global investment bank, has committed R340 million rands to address this problem.

The kitty will help black-owned and operated small and medium enterprises through an equity equivalent investment programme (EEIP), which the Department of Trade, Industry and Competition (the dtic) launched with JP Morgan.

The funding is tailored for small-businesses that cannot meet the traditional underwriting criteria of commercial banks and/or face critical funding challenges.

Funds, under the EEIP programme, will be disbursed to SMMEs through three vehicles, which are Abadali Fund, Black Business Fund, and Abadali Grant.

JP Morgan will oversee the fund and Masakhe Partners will be administrators.

The dtic Minister, Ebrahim Patel, said that it is envisaged that the fund will result in R2 billion of financing transactions and about 1 000 jobs over an eight-year period.

JP Morgan’s joint senior country officer, Kevin Latter, stressed the critical role of a strong partnership between the government and business in post Covid-19 economic recovery efforts.

“The South African private sector has great capacity to multiply impact through partnerships, Now is the time to reinforce and increase our commitment to equality and inclusive growth and work harder across our business,” Latter said.

JP Morgan’s joint senior country officer, Kevin Latter, stressed the critical role of a strong partnership between the government and business in post Covid-19 economic recovery efforts.

“The South African private sector has great capacity to multiply impact through partnerships, Now is the time to reinforce and increase our commitment to equality and inclusive growth and work harder across our business,” Latter said.

Key highlights of the funding terms include:

  • Short-term finance provided to businesses with minimal or no initial revenue, with capital requirement of at least R250 000 over one to 12 months.
  • The fund will have seven days turnaround time from application to payment.
  • Medium- to long-term finance will be offered at significantly subsidised rates to businesses with revenue starting from R1 million that require funding for two to five years.
  • The terms on which the funding will be extended are concessional, including limited security requirements and loan repayment payment holidays that respond to the life stages of SMEs.

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