SINGAPORE - Relief measures to help individuals and small- and medium-sized enterprises (SMEs) with cash flow difficulties will be extended into 2021.

This is intended to give those who have applied to defer loan repayments more time to resume their debt servicing, said the Monetary Authority of Singapore (MAS) on Monday (Oct 5), in its joint announcement with the Association of Banks in Singapore (ABS) and the Finance Houses Association of Singapore.

The reliefs are also available to those who have not applied to defer payments previously, but are now facing cash flow challenges.

The extended measures will allow both individuals and businesses to transition gradually to full loan repayments, as the central bank and the financial industry recognise that many will continue to experience cash flow pressures into early 2021, MAS said.

But it urged borrowers who are able to resume paying loan instalments in full to start doing so from Jan 1, 2021, as further postponement increases their overall debt.

"We want to continue providing relief to borrowers facing cash flow challenges while encouraging them to resume loan repayments to the extent they are able to, so that they do not accumulate too much debt," said MAS managing director Ravi Menon.

"A good outcome is one where individuals and SMEs are able to use the support measures to help them tide through the current economic difficulties and emerge with a sustainable debt burden as the economy recovers," he added.

Reliefs for individuals

Measures for which the application period has been extended to June 30 next year include converting credit card balances to a lower interest term loan.

Those who are not able to resume full loan repayments on their property loans may apply to make reduced instalment payments pegged at 60 per cent of their monthly instalment, for a period of up to nine months.

Individuals servicing renovation and student loans may also apply to extend loan tenures by up to three years.

Eligibility criteria for these two measures include proof of income loss. The application period closes on June 30, 2021.

As of August, some 36,000 applications have been made to defer property loan payments.

"Broadly, the number of mortgage deferments has tapered off, since the peak in April to June 2020 when more individuals were affected by the circuit breaker measures," a spokesman for MAS said.

There were nearly 34,000 approved mortgage relief applications as of June.

DBS Bank has approved some 9,000 home loan repayment relief applications amounting to $5.2 billion so far, while OCBC Bank has approved over 8,000 mortgage, car and renovation loan relief applications totalling over $5 billion.

UOB has received more than 8,000 applications to defer mortgage repayments and more than 4,000 applications to convert unsecured debt into lower-cost term loans. It said it approved the majority of them.

Reliefs for SMEs

Further support has also been made available to SMEs, by allowing the deferment of loan payment beyond the end of this year.

Under previously announced measures, companies could apply to defer principal repayments on their secured loans granted by banks or finance companies until Dec 31, 2020.

The Extended Support Scheme - Standardised will allow businesses in sectors most affected by the Covid-19 pandemic to defer 80 per cent of principal payments until June 30, 2021.

This applies to SMEs in the following sectors: aviation and aerospace, tourism, hospitality, conventions and exhibitions, built environment, licensed food shops and food stalls, qualifying retail outlets, arts and entertainment, marine and offshore, as well as land transport.

Firms in other sectors can apply to defer 80 per cent of principal payments until March 31, 2021.

Loans granted under Enterprise Singapore's (ESG) enhanced working capital loan scheme and temporary bridging loan programme are also eligible for deferment.

As of September, more than 18,000 enterprises have taken loans under ESG's schemes, with a total loan quantum exceeding $14.5 billion.

More than 5,400 applications have been made to defer principal payments on secured term loans as of August.

A customised support scheme to facilitate multi-lender restructuring, for firms that the standardised scheme is not suitable, is also being developed by banks and finance companies.

This Extended Support Scheme - Customised is intended to complement other restructuring assistance schemes such as the Ministry of Law's proposed Simplified Insolvency Programme, MAS said.

ABS chairman Samuel Tsien said: "Banks will work closely with those who need further support by offering other restructuring solutions."

Applications for both schemes will start from Nov 2.

Further details on the relief measures can be found here.