The National Treasury has launched the Energy Bounce Back (EBB) loan guarantee scheme to facilitate 1 GW a year in additional generation capacity and mitigate the impact of continuing difficulties from unreliable power supply for small businesses and households.

The initiative is also aimed at increasing resilience to loadshedding for micro-sized and informal businesses. Resilience measures include power storage assets without generating capacity, like batteries and inverters.

The EBB will be available until August 30, 2024.

The scheme will use three mechanisms, namely a loan guarantee for rooftop solar for small and medium-sized enterprises (SMEs) and households’ investment, a loan guarantee for rooftop solar for energy service companies and working capital loans for businesses in rooftop solar supply chain.

Businesses with a maximum turnover of R300-million can borrow a maximum amount of R10-million. Businesses can also borrow a maximum of R30 000 through the scheme for resilience measures, which is to enable access for micro-sized and informal businesses that may require portable batteries or similar equipment to these assets.

Households can access a maximum loan amount for the purchasing of rooftop solar of R300 000 per household.

Further, businesses in the rooftop solar supply chain, and 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 similarly borrow a maximum of R100-million.

An additional mechanism will be concluded with the Industrial Development Corporation (IDC) to facilitate new energy service company entrants, as well as scale up existing energy service companies through a mezzanine finance instrument. The IDC and National Treasury will provide details of this instrument, once concluded, Treasury says.

Development finance institutions (DFIs) 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, it adds.

"To facilitate investments government will, through a government guarantee administered by the South African Reserve Bank, assume the initial losses of up to 20%, with finance providers assuming the risk for remaining losses for SMEs' and households’ rooftop photovoltaic solar investments," Treasury explains in a statement on August 8.

Pricing of the loans will be capped at the repo rate, at the commencement of the loan, plus a maximum of 6%.

Households and SMEs will have the option of approaching any participating bank.

"Participation in the EBB will 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. Any business borrowing under the EBB will be expected to meet the participating bank’s specific requirements, be registered with the Companies and Intellectual Property Commission or be registered for Value-Added Tax with the South African Revenue Service, Treasury says.

Participating banks, DFIs and non-bank SME finance providers will compete subject to the product terms, conditions, and pricing cap, it highlights.