The National Treasury has launched its long-awaited Energy Bounce Back Loan Guarantee Scheme (EBB), which will allow households and small businesses to borrow a maximum of R300 000 and R10 million, respectively, from commercial banks to mitigate the impact of load shedding.
Treasury, on Tuesday, released the details of the EBB Loan Guarantee Scheme, which was supposed to be launched in April, and will be available until 30 August 2024.
In his February Budget Speech, Finance Minister Enoch Godongwana announced the scheme in a bid to incentivise renewable energy, rooftop solar and address energy-related constraints experienced by households and SMEs.
In the scheme, the government will guarantee solar-related loans for small and medium enterprises on a 20% first-loss basis to encourage businesses and individuals to invest in renewable energy and increase electricity generation.
Participating banks and other lenders will lend this money as well as their own funds for the un-guaranteed portion of 80% of the loan amount to SMEs and households at an interest rate of no more than the repo rate plus 6%.
The scheme aims to generate 1 000MW in additional generation capacity as well as facilitate resilience to load shedding for micro and informal businesses.
The EBB is a complementary intervention to the tax measures announced in the 2023 Budget in which individuals claim a rebate of 25% of the cost of the panels up to a maximum of R15 000, so applicants may therefore apply for both tax and EBB measures.
Treasury said The EBB would work through three mechanisms.
Firstly, the loan guarantee will facilitate loans to SMEs and households for investments related to rooftop solar generated energy, including solar panels, batteries, inverters, and other installation related costs.
This mechanism will also allow for loans to purchase resilience assets like small portable batteries for businesses only.
The second mechanism is the loan guarantee for rooftop solar for Energy Service Companies (ESCOs) that provide leasing, instalment sales, 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 three is working capital loans for businesses in rooftop solar supply chains.
This mechanism will facilitate working capital loans for those businesses that supply rooftop solar to meet increased demand and help increase the supply of rooftop solar solutions, allowing businesses to source rooftop solar equipment with minimum delays.
Treasury said participation in the EBB would be facilitated through commercial banks on an opt-in basis.
Non-bank finance providers, including wholesale retailers who provide lending products to SMEs for EBB eligible related loans, can access the scheme through participating commercial banks.
Participation through commercial banks will be subject to basic requirements, such as tax compliance and adherence to other legal and regulatory requirements.
Eligible businesses must have a maximum turnover of R300 million.
DFI’s 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 R300 million per entity.
The maximum amount a business can borrow is R10 million. 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 R100 million for working capital to ensure that wait times are reduced. Installers can borrow a maximum of R100 million.
BUSINESS REPORT