S’pore banks ramp up efforts to help small and micro enterprises amid digital banking push

Since March, DBS Bank has approved nearly 10,000 loans to small and medium-sized enterprises.
Since March, DBS Bank has approved nearly 10,000 loans to small and medium-sized enterprises.PHOTO: BLOOMBERG

SINGAPORE - All three big banks are making efforts to help small and micro businesses hit hard by the Covid-19 pandemic secure much-needed funding.

Since March, South-east Asia's largest bank, DBS, has approved about 9,500 collateral-free loans totalling over $3 billion to small and micro enterprises.

Ms Tan Su Shan, group head of institutional banking at DBS, told The Straits Times on Tuesday that the bank estimates about $1.2 billion to $3.2 billion in unmet funding for micro enterprise or businesses with an annual revenue of up to $1 million.

A study published last year by Validus Capital found that SMEs in Singapore face a financing gap of $20 billion.

Ms Tan said: “While some micro enterprises may have flown under the radar, we are proactively reaching out to these businesses now. For us, these smaller companies would be better served digitally, end to end.”

Half of the loans given to micro enterprises since March were for customers who had no prior borrowing relationship with the bank.

“This suggests a preference for micro enterprises to go with a trusted and established lender in taking out their first business loan,” said DBS, which has more than 40,000 micro enterprise customers.

DBS this year launched a collateral-free digital business loan of up to $200,000, to be disbursed within one working day, with no financial statements needed in the application process.

Ms Joyce Tee, group head of SME banking, said micro enterprises may not be familiar with the support available to them, even though many have viable business models and the potential to grow.

“That is why we have gone out of our way to ensure micro enterprises are well-supported to weather the economic storm, and we are heartened that many businesses we supported through the early days of Covid-19 are beginning to see the green shoots of recovery.”

Besides loans, DBS is intensifying efforts to help firms improve their overall business operations, said Ms Tan.

Plans in the pipeline include a digital procurement hub that will link buyers and suppliers who have complementary needs.

“It’s about helping them to grow their top line with relevant data, reduce transaction costs, and putting them on trade platforms to find their supply chain and get them paid on time.

“If we know that you’re selling to a buyer who’s our client, and through your transaction history we know that the buyer will pay you on time, we can offer you financing and hopefully at an even more competitive rate than what you would get in the market.”

Ms Tan added that the bank has mined and programmed its data trove to give businesses personalised advice.

For example, it uses machine learning to send contextualised alerts to firms on platforms such as corporate banking portal DBS Ideal to advise them on how they can manage interest rate and foreign exchange risks, in response to real-time developments.

More help is also on the way for specific sectors. In March, the bank launched an F&B digital relief package that enables businesses to set up an online food-ordering site in just three business days. It plans to roll out a similar package for SMEs in retail and tourism.

The moves by DBS are part of a broader plan by the bank to enhance its digital services amid greater competition from non-bank players which will soon be issued licences to do so.

Meanwhile, OCBC has made a total of over $1 billion in collateral-free loans to 6,000 micro and small businesses. Half of these went to customers who did not have borrowing facilities with the bank.

Mr Linus Goh, OCBC’s head of global commercial banking, said: “In the second half of this year, we have observed some early signs of green shoots in certain industries and businesses, with a growing interest in new loans to support these opportunities.”

United Overseas Bank has disbursed more than $1.3 billion in collateral-free loans to small and micro businesses since March.

It has also offered pre-approved loans of up to $200,000 to eligible small businesses since April. 

Under the initiative, these businesses can receive funds in up to two business days as they do not need to submit documents required for credit assessment. 

Mr Lawrence Loh, UOB’s head of group business banking, said the bank has digitalised the entire loans application process for small business customers. 

He added that through UOB’s tie-ups with ecosystem partners, small businesses can apply for loans based on data relating to their online sales performance and day-to-day operations, without the need to submit financial statements.

Correction note: This article has been edited for clarity.