Enhanced financing schemes, $20 billion in loan capital to give businesses access to credit during Covid-19 crisis

The Temporary Bridging Loan Programme will be made available to enterprises across all sectors from April 1.
The Temporary Bridging Loan Programme will be made available to enterprises across all sectors from April 1.ST PHOTO: KELVIN CHNG

SINGAPORE - Around $1.7 billion drawn from past reserves will be used to finance several enhanced schemes to provide businesses with access to credit amid the coronavirus outbreak.

The Temporary Bridging Loan Programme, which was rolled out to the hard-hit tourism sector at last month's Budget, will be made available to enterprises across all sectors from April 1.

Businesses can take a loan of up to $5 million under the programme, up from the previous $1 million cap. All eligible enterprises can apply for the programme till March 31, 2021.

With the enhancements, even the hardest-hit businesses can continue to have access to credit, said Deputy Prime Minister Heng Swee Keat in Parliament on Thursday (March 26).

Around $20 billion of loan capital has also been allocated in the $48 billion Supplementary Budget unveiled by Mr Heng to support companies with strong capabilities and catalyse private sector loan capital.

The SME Working Capital Loan, which helps small and medium-sized enterprises (SMEs) in all industries access financing for cash flow, has also been updated.

The maximum loan quantum has been increased to $1 million, up from the $600,000 cap announced at Budget 2020.

The Government will work with participating financial institutions to defer principal payments for one year on loans under these two schemes if enterprises request to do so.

The Enterprise Financing Scheme - Trade Loan, which supports enterprises in areas such as the financing of short-term import and export needs, will be enhanced for one year from April 1.

 
 
 
 

The maximum loan quantum has been raised to $10 million, up from $5 million, and the Government's risk-share has been increased to 80 per cent, compared with the previous 70 per cent.

Interest rates for loans taken under the programmes are subject to assessments by participating financial institutions.

The Government is also increasing its subsidies to businesses for loan insurance premiums under the Loan Insurance Scheme to 80 per cent, up from 50 per cent, to help SMEs across all industries manage their trade financing costs.

The programme helps SMEs secure short-term trade loans, and the increased support will be in place for a year from April 1.

Mr Heng highlighted that the Monetary Authority of Singapore is working with banks and insurers to see how they can best help businesses and individuals facing cash flow challenges with their loan obligations and insurance premium payments.

Details on these will be announced by the central bank and the industry at a later date, he noted.