MCEP loans for businesses in the Manufacturing Industry

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The Manufacturing Competitiveness Enhancement Programme (MCEP) is one of the key action programmes of the Industrial Policy Action Plan (IPAP) provides support aimed at encouraging manufacturers to upgrade their production facilities in a manner that sustains employment and maximises value-addition in the short to medium term. Dream Team Capital can provide access to MCEP loans for businesses and assist with the necessary developments.

The Manufacturing Competitiveness Enhancement Programmer comprises of two sub-programmes: the Production Incentive (PI) and the Industrial Financing Loan Facilities which will be managed by the dti and the Industrial Development
Corporation respectively:

1. Production Incentive
The Production Incentive 80% by Rand value of the MCEP. Calculation of MCEP credits for this incentive will be up to 25% of the manufacturing value added. It consists of 5 sub-components:

  • Capital Investment grant;
  • Green Technology and Resource Efficiency Improvement grant;
  • Enterprise-Level Competitiveness Improvement grant;
  • Feasibility Studies grant; and
  • Cluster Interventions grant.

2. Industrial Financing and Loan Facilities

The Industrial Financing and Loan facilities comprises two components i.e. Pre and post-dispatch Working Capital Facility and the Industrial Policy Niche Projects Fund:

  • Pre/Post-dispatch Working Capital Facility offers a working capital facility up to a maximum of R30 million for a period of up to four years, at a preferential fixed interest rate of 6%; and
  • Industrial Policy Niche Projects Fund: projects identified by the dti sector desks and IDC’s Strategic Business Units that focus on new areas with the potential for job creation, diversification of manufacturing output and contribution to exports, that would otherwise not be candidates for commercial or IDC funding, may be eligible for an MCEP grant that may be structured as part of the borrower’s equity contribution.

MCEP loans for businesses

The MCEP is a support scheme which offers manufacturing companies incentives to raise their competitiveness and retain jobs. It has a budget of R5.8-billion over a three-year period.

The objective of the programme is to facilitate feasibility studies that are likely to lead to bankable business/project plans, which will result in investment in new components or products or processes not currently manufactured or performed by the applicant or in the creation of markets that will lead to a substantial increase in the manufactured products of the applicant.

The feasibility study component of MCEP offers a cost-sharing grant of 50% or 70% of the cost of the feasibility study, to be payable according to expected milestones. The cost-sharing grant percentage will be differentiated by enterprise size as follows:

  • Applicants with total assets with a historical cost below R30 million may qualify for a grant of 70% of the cost of the feasibility study; and
  • Applicants with total assets with a historical cost of at least R30 million may qualify for a grant of 50% of the cost of the study.

Applicants should submit a pre-feasibility study report in the prescribed format, confirming that the expected project minimum investment will be at least R30 million. The maximum grant for feasibility studies will be capped at R7.5 million.The grant is provided directly to approved applicants based on actual qualifying costs incurred and subject to jobs being retained.

MCEP loans for businesses

Objectives of the Manufacturing Competitiveness Enhancement Programme (MCEP)

Promote enterprise competitiveness & job retention by funding existing
manufacturing entities to:

  • invest in capital equipment, upgrading of production facilities, processes and
  • invest in green technology improvement that will lead to cleaner production
    & resource efficiency;
  • enhance competitiveness through skills development, information technology
    systems that are part of the manufacturing process;
  • facilitate FS that are likely to lead to bankable project plans that will result in
    new investments;
  • encourage collaboration amongst a cluster firms in order to increase
    productivity and international competitiveness; and
  • reduce the cost of finance for distressed enterprises by offering preferential
    interest rates.

Eligibility Criteria for the Manufacturing Competitiveness Enhancement Programme (MCEP)

1. Applicant must be registered as a legal entity in SA;
2. Be an existing manufacturing entity for a period of 2 years;
3. Have a valid tax clearance certificate;
4. Investment project(s) must be classified under the SIC 3 ( check with SARS );
5. Level 4 B-BBEE contributor status in terms of B-BBEE codes – if an applicant has not achieved this level = submit a plan to demonstrate how they will progress towards achieving this level within 4 yrs;
6. Investment project (s) may not result in reduction of base-yr employment;

7. Minimum investment required;
8. Submit an e- application ( no manual applications) 60 D before you put assets into commercial production or undertake business development activities (BDA);

9. Pending litigation (s) against the applicant that may have material effect on the applicant’s financial position should be brought to the attention of the dti at the time of the application; and
10. Last Audited financial statements ( not older than 18 months).

At DTC, we understand the complexities of the various funding agencies and the unique application criteria for each. We have assisted thousands of entrepreneurs through the application process to access funding for businesses, and we can assist you with the same.

Contact us for more information on MCEP loans for businesses.