NCA Thresholds & the R1 000 000 Juristic-Person Exemption: When the National Credit Act Stops Applying [2026]

When the National Credit Act applies at all

The starting point is wide. The National Credit Act applies to every credit agreement between parties dealing at arm’s length in South Africa. There is no general carve-out for business borrowing. Instead, the Act lists specific exceptions in s 4(1), and two of them are aimed squarely at juristic persons — companies, close corporations and trusts that borrow:

Two questions decide whether a corporate facility escapes the Act. First, how big is the borrower? — the R1 000 000 turnover/asset test in s 4(1)(a)(i). Second, if the borrower is below that line, how big is the deal? — the “large agreement” route in s 4(1)(b). The combined effect is that the Act rarely governs substantial corporate borrowing. But the exclusions only protect juristic persons; a natural-person borrower (an individual, even a sole proprietor) enjoys neither, so the Act applies to consumer credit regardless of size.

The first exclusion: the R1 000 000 turnover or asset threshold

Section 4(1)(a)(i) removes a credit agreement from the Act if the consumer is a juristic person large enough to be assumed not to need the Act’s consumer protections. The line is the threshold the Minister sets under s 7(1) — currently R1 000 000:

Two features matter. The test is disjunctive — asset value or annual turnover — so a company with modest assets but turnover at or above R1m is excluded, and vice versa. And it is fixed at the time the agreement is made: a company that was above the line when it borrowed does not pull the agreement back under the Act if it shrinks later.

The threshold itself is set by the s 7(1) Determination, and the statute caps how high the Minister may set it:

How the R1 000 000 is measured: stated value and related companies

Because everything turns on the figure, the Act tells you how to find it. Under s 4(2)(a) the asset value or turnover is simply the value the company states when it applies for or enters into the agreement — not a figure a court reconstructs after the fact:

The figure is not the borrowing company alone. Section 4(1)(a)(i) requires the company’s value to be combined with that of all related juristic persons, and s 4(2)(d) defines “related” by control:

The practical consequence is aggregation. A small operating subsidiary that borrows R100 000 may, on its own, sit well below R1m; but if it is part of a group whose combined turnover or assets clear the line, the agreement is excluded under s 4(1)(a)(i). A lender relying on the exclusion should record the stated figure (and the group it includes) in the loan documents, so the basis for being outside the Act is captured at the moment the agreement is made.

The second exclusion: the “large agreement” route (R250 000)

A small company — one below R1m — is not automatically inside the Act. There is a second exclusion in s 4(1)(b) that takes a sub-threshold juristic person out of the Act whenever the agreement itself is a large agreement:

What counts as a “large agreement” is defined in s 9(4): a mortgage agreement, or any other credit transaction (other than a pawn or a credit guarantee) whose principal debt reaches the higher s 7(1)(b) threshold:

So for a sub-R1m company, the test is the size of the principal debt: a non-mortgage loan with a principal debt of R250 000 or more is a large agreement and is excluded. A mortgage agreement is a large agreement whatever its size. The two exclusions thus interlock — and that interlock is what makes the Act so rare in corporate lending.

Small, intermediate and large agreements: the s 9 matrix

The “large agreement” concept is one rung of a three-rung ladder. Section 9 sorts every credit agreement into small, intermediate or large using the two s 7(1)(b) thresholds (R15 000 and R250 000):

In plain terms, for a non-mortgage credit transaction: a principal debt of R15 000 or below is small; between R15 000 and R250 000 is intermediate; and R250 000 or above is large. Only the large rung carries the s 4(1)(b) exclusion for sub-R1m juristic persons — small and intermediate corporate deals below R1m remain inside the Act. The category also matters for disclosure and quotation formalities even where the Act does apply, which is why the same thresholds recur throughout the regulatory regime.

Profit Hub v Zuwon: the SCA’s either/or reasoning

The 2026 SCA decision in The Profit Hub (Pty) Ltd v Zuwon Consultants (Pty) Ltd is the most recent and definitive statement of how the two exclusions work. The Profit Hub had advanced R290 000 under one agreement and R270 000 under another to Zuwon, a company, against the security of suretyships. Even though the court found the agreements were in substance loans, not discounts, the Act did not apply to them — and the reason was the thresholds. Unterhalter JA first confirmed both current figures:

The elegance of the reasoning is that the court did not need to know Zuwon’s exact turnover. It held that whichever way that fact fell, an exclusion applied — because each advance exceeded R250 000, the agreements were large agreements:

That is the most useful structural insight a corporate borrower or lender can take from the case: where the principal debt is at or above R250 000, the juristic-person consumer is outside the Act regardless of how big the company is. The big-company exclusion and the large-agreement exclusion together cover the field.

Is it even a credit agreement? Substance over form first

The thresholds only come into play once you have an agreement that is a credit agreement. That prior question is decided on substance, not the label the parties put on the paper. In Profit Hub, applying the Endumeni text-context-purpose method, the SCA put it this way:

Not every loan is a credit facility. A credit facility under s 8(3)(a) requires the credit provider to pay amounts “as determined by the consumer from time to time” — the revolving, draw-down autonomy of a store card or credit card. The SCA described the two commercial types of credit facility this way, drawing on JMV Textiles v De Chalain:

Because Zuwon borrowed a definite Advance Amount and had to repay it, with no autonomy to draw down from time to time, the majority held the loans were not credit facilities at all:

Whether or not a financing is a credit facility, common to every species of credit agreement is the payment of a charge, fee or interest for the use of the credit. As the SCA noted in Asmal v Essa, those words are broad and undefined — they catch “any consideration” paid by a borrower to a provider for the use of credit. The practical sequence for any corporate facility is therefore: (1) is it a credit agreement at all? (2) if so, does a juristic-person threshold exclusion take it back out?

Where the Act does apply, registration still bites

The threshold exclusions are powerful, but they are not a licence to be careless. If an agreement does not qualify for an exclusion — a sub-R1m company borrowing under R250 000, or any natural-person borrower — the Act applies, and with it the duty to be a registered credit provider. That duty is now triggered at the slightest exposure: the registration threshold prescribed under s 42(1) was reduced to nil (R0) with effect from 11 November 2016.

With the prescribed threshold at zero, even a single applicable credit agreement obliges the provider to register. An unregistered provider’s credit agreement can be unlawful and void (s 40(4), read with s 89) — so getting the threshold analysis right is not academic. Before you sign or fund a corporate facility, work through three questions in order: is it a credit agreement? Is the borrower a juristic person at or above R1 000 000, or is the principal debt at or above R250 000? And if neither exclusion applies, is the lender registered? Each answer changes the compliance burden — and the enforceability of the deal.

Need this checked against your actual facility documents, group structure or security? Book a consultation and we will work through the characterisation and threshold analysis for your transaction.