SINGAPORE - Help is at hand for small firms in financial distress due to Covid-19.

One initiative will assist sole proprietors or partnerships restructure unsecured debt such as credit card bills or loans secured without collateral.

Another scheme will help small- and medium-sized enterprises (SMEs) work out their credit facilities across multiple banks and finance companies all at once.

The two schemes - both from the Association of Banks in Singapore (ABS) - come amid concerns that companies in badly hit industries may be plunged into bankruptcy once earlier support measures start to tail off as Singapore reopens.

The Law Ministry had introduced several measures to alleviate the impact of the crisis on businesses, including a moratorium on legal action over rents and contracts, and increasing the thresholds for bankruptcy and insolvency proceedings.

It will also introduce programmes to help companies with annual revenues from $1 million to 10 million restructure debt or wind up.

The Sole Proprietors and Partnerships scheme from the ABS aims to complement this by focusing on businesses that are struggling to service loan commitments but are likely to recover given time and revised repayment terms.

It was developed with the support of several ABS member banks, the Monetary Authority of Singapore and Enterprise Singapore, among others.

The scheme will allow businesses to work with Credit Counselling Singapore, a non-profit organisation, to help restructure unsecured debt owed to 17 participating lenders, including all the main banks here.

Firms can work towards securing lower monthly instalment payments for unsecured borrowings by extending the loan repayment period up to a maximum of eight years.

Interest rates for the restructured debt will be based on the loan's original contractual terms, subject to a maximum of 7 per cent a year.

A firm can qualify if its total unsecured debt does not exceed $1 million and it must also owe unsecured debt to two or more of the participating lenders.

Approval will be at the sole discretion of the lenders.

The other ABS initiative - called the Extended Support Scheme - Customised - is available to SMEs with viable businesses.

It has been devised with the support of the Finance Houses Association of Singapore to help restructure a firm's credit facilities across multiple banks and finance companies, including loans under Enterprise Singapore's Temporary Bridging Loan Programme and Enhanced Working Capital Loan Scheme.

Both schemes will be open for application from Monday (Nov 2).