THE value of loans made to companies in December jumped 30 per cent from a year ago, with the introduction of the new loan schemes, Minister for Trade and Industry Lim Hng Kiang told Parliament yesterday.

The Government will now focus on increasing the awareness of these schemes, Mr Lim said, while ruling out the possibility of the Government acting as a direct lender to businesses, as it is not suitable for the role.

Tha value of approved loans increased from $62 million in December 2007 to $80 million last month, after a string of new Government schemes to make it easier for companies to secure bank loans was introduced.

Mr Lim said that some 500 loan applications were submitted that month, with many applications still being processed by the banks.

But the minister expects loans to decline in the next few months, as was seen during the Asian financial crisis, as businesses cut back their investments and expansion plans during the economic slowdown.

The Government moved pre-emptively last month to enhance the existing loan schemes, Mr Lim said.

The schemes, aimed primarily at helping small and medium-size enterprises (SMEs), included raising the Government's share of the risk on loans from 50 to 80 per cent, raising loan quantum limits, introducing a Bridging Loan Programme (BLP) to support working capital needs, and reducing interest rates by 1.25 per cent.

But feedback from industry bodies and SME bosses have indicated that loans are still hard to come by.

'These enhancements have been in place for less than two months. It is too early to assess their effectiveness but preliminary indications are promising,' Mr Lim said.

The onus is still on the companies to provide the relevant data for their applications and 'to show that their businesses are viable and bankable' he added.

'It is only natural, in any recession, that companies seeking loans are questioned in more detail and their applications are scrutinised.'

Responding to a question from Hong Kah GRC MP Zaqy Mohamad on whether the Government would consider lending directly to companies, Mr Lim made it clear the it would not go into that.

'The Government is... not in a good position to lend to enterprises directly. We do not have the expertise and are not well placed to do so. Credit risk assessment is best done by the professionals in our financial institutions, who have the necessary domain knowledge," said the minister.

'Government loans therefore play a targeted role; they are not intended to replace commercial lending. Our primary objective remains to assist viable but riskier companies access credit which they would otherwise be unable to get at reasonable rates.'