The National Treasury has officially launched the Energy Bounce Back Loan Guarantee Scheme (EBB) for small businesses and households looking to invest in solar and power storage equipment.
In his February 2023 State of the Nation Address, President Cyril Ramaphosa committed to adjusting the bounce-back loan scheme to enable small businesses to invest in solar equipment.
Then, during his 2023 Budget speech, Minister of Finance Enoch Godongwana provided details on the adjustment of the scheme, saying the “government will guarantee solar-related loans for small and medium enterprises on a 20 percent first-loss basis”.
The EBB, announced on Tuesday, will be available until August 30, 2024.
It aims to generate 1000MW in additional generation capacity as well as facilitate resilience to load shedding for micro and informal businesses.
Resilience measures include power storage assets without generating capacity, such as batteries and inverters.
Treasury explained that the EBB was a complementary intervention to the tax measures announced in the 2023 Budget speech, which allow for a tax credit of up to 25% of the cost of solar PV panels, with a cap of R15 000.
The EBB scheme will operate through three mechanisms:
Mechanism 1: Loan guarantee for rooftop solar for SMEs and households’ investment.
This mechanism will facilitate loans to SMEs and households for investments related to rooftop solar generated energy. This investment includes solar panels, batteries, inverters and other installation-related costs.
Mechanism 2: Loan guarantee for rooftop solar for Energy Service Companies (ESCOs)
This mechanism will facilitate loans to ESCOs who provide leasing, instalment sale, and power purchase contracts to SMEs and households. This mechanism will allow businesses and households to switch to ESCO service providers for more reliable and cleaner energy without the need for loans to finance the full upfront costs of rooftop solar equipment themselves.
Mechanism 3: Working capital loans for businesses in rooftop solar supply chain
This mechanism will facilitate working capital loans for those businesses that supply rooftop solar to meet increased demand. This mechanism aims to increase the supply of rooftop solar solutions allowing businesses to source rooftop solar equipment with minimum delays.
Eligibility:
- Eligible businesses must have a maximum turnover of R300 million.
- Development financial institutions and non-bank lenders, which include wholesale retailers offering credit products servicing informal traders, can also access the scheme through a commercial bank up to a maximum of R300m per entity.
- The maximum amount a business can borrow is R10m.
- Businesses can also borrow a maximum of R30 000 through the scheme, for resilience measures. This is to enable access for micro, informal businesses that may require portable batteries or similar equipment to these assets.
- For households, a maximum loan amount, for the purchasing of rooftop solar, will be R300 000 per household.
- Businesses in the rooftop solar supply chain, those importing batteries, investors and panels will be able to borrow up to R100m for working capital to ensure that wait times are reduced.
- Installers can borrow a maximum of R100m.
Rates:
- Pricing of the loans will be capped at the repo rate (at the commencement of the loan) plus a maximum of 6%.
How to apply:
Treasury said households and SMEs will have the option of approaching any participating bank. Participating banks, Development Finance Institutions and non-bank SME finance providers will compete subject to the product terms, conditions, and pricing cap.
Cape Times