The Treasury has announced changes to its loan guarantee scheme for energy solutions to enable small businesses to invest in solar equipment. The aim is for small businesses and households to use the scheme to finance 1,000MW of solar rooftop capacity over the next 12 months.
The energy bounce-back loan guarantee scheme will offer households and businesses financing support to buy alternative electricity solutions such as rooftop solar, inverters and backup batteries.
Through the scheme, the Treasury has provided a guarantee to the SA Reserve Bank, which will in turn lend money to participating banks at the repo rate plus a 0.5% one-off charge. Banks and other lenders will then provide the loans to businesses and households at an interest rate of no more than the repo rate plus 6%.
Lenders
The scheme involves the Treasury taking the first 20% loss in the event of default. Lenders, including banks, development finance institutions and nonbank SME finance providers, will take on the remaining risk.
So far, Absa, FNB and Standard Bank have indicated they will participate as lenders, the Treasury said.
To qualify businesses must have a turnover of no more than R300m. The maximum amount a business can borrow is R10m. SMEs can also borrow a maximum of R30,000 through the scheme for “resilience measures”. This can include “power storage assets without generating capacity, like batteries and inverters”.
“This is to enable access for micro and informal business [that] may require portable battery or similar equipment to these assets, as well as businesses operating on premises where landlords are unable or unwilling to enable solar panel installations.”
The maximum loan amount per household for rooftop solar will be R300,000. Businesses in the rooftop solar supply chain will be able to borrow up to R100m for working capital to ensure wait times are reduced.
The funds will be dispersed through participating banks on a first come, first served basis until either the final date (August 30 2024) is reached or the scheme reaches 1,000MW.
The Treasury said the scheme will run complementary to the tax incentive announced by finance minister Enoch Godongwana during the 2023 budget speech, which means businesses and households that have claimed under the tax incentive may also apply for loans under the energy bounce-back scheme.
The 2023 national budget made provision for R4bn in relief for households that install solar panels and R5bn for companies through an expansion of the renewable energy incentive.
It allows individuals who install rooftop solar panels to claim a rebate of 25% of the cost of the panels, up to a maximum of R15,000, to reduce their tax liability in the 2023/24 tax year.
Businesses are able to reduce their taxable income by 125% of the cost of an investment they make in new renewable power generation capacity.
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