SINGAPORE - SMEs which have successfully applied for government grants can now tap on DBS' bridging loans to cover their interim expenses.

DBS will be the first bank in Singapore to offer such bridging finance to support government grant schemes, it said in an announcement on Tuesday (March 15).

DBS said the loans are collateral-free and the small and medium enterprises (SMEs) will also enjoy preferential interest rates, as well as annual and early pre-payment fee waivers.

Government grants for SMEs help defray costs associated with skills upgrading, innovation and productivity related projects, product development, or overseas expansion. However, such reimbursements usually only kick in when a project is completed.

DBS said its business capabilities loan, acting as bridging finance, can be used to cover project expenses incurred before the SME gets reimbursed.

Said Joyce Tee, DBS' regional head of SME banking: "With the economic outlook getting tougher, we hope that the new DBS capabilities loan will be a cost-effective way to help alleviate the strain on SMEs' cash flows, thereby encouraging them to embrace innovation and grow new sources of revenue."

From March 15 to June 30 this year, DBS will also waive the S$1,000 processing fee for all applications for these loans.