Customised debt restructuring programme launched by financial institutions

FINANCIAL INSTITUTIONS IN SINGAPORE LAUNCH INDUSTRY’S FIRST CUSTOMISED DEBT RESTRUCTURING PROGRAMME TO HELP SMES OVERCOME IMPACT OF COVID-19

• 16 financial institutions to adopt common approach in helping SMEs restructure their debt holistically through customised debt restructuring programme

The Association of Banks in Singapore (ABS), with the support of the Finance Houses Association of Singapore, in early November announced the launch of the Extended Support Scheme – Customised (ESS-C), the first industry programme to help small- and mediumsized enterprises (SMEs) restructure their credit facilities across multiple banks and finance companies.

The programme is available to SMEs with viable businesses and facilitates a coordinated approach to the restructuring of an SME’s existing credit facilities across multiple banks and finance companies. These credit facilities include loans under Enterprise Singapore’s Temporary Bridging Loan Programme and Enhanced Working Capital Loan Scheme. The industry effort was led by UOB, together with the other major banks (Citibank Singapore Limited, DBS Bank Ltd, The Hongkong and Shanghai Banking Corporation Limited, Maybank Singapore Limited, Oversea-Chinese Banking Corporation Limited, and Standard Chartered Bank (Singapore) Limited) and the Monetary Authority of Singapore (MAS).

The ESS-C is part of the package of extended relief measures announced by MAS, the ABS, and the Finance Houses Association of Singapore on 5 October 2020 to assist borrowers facing cashflow challenges due to the COVID-19 pandemic. It complements other customised restructuring assistance schemes under the Ministry of Law (MinLaw)’s Simplified Insolvency Programme for micro and small companies and Credit Counselling Singapore (CCS)’s scheme for sole proprietors and partnerships (SPP Scheme).

Mrs Ong-Ang Ai Boon, Director, ABS, said, “The deep and prolonged impact of COVID19 has resulted in many SMEs experiencing tremendous financial strain. SMEs make up 99 per cent of all businesses and employ 65 per cent of workers in Singapore, so it is vital that we do all we can to help them weather this crisis. Given the depth of this crisis, the financial industry has come together to adopt a collective approach to help SMEs with viable business models restructure their debt. The intent is to facilitate a more holistic restructuring of an SME’s loans compared to if the SME had to approach its lenders individually.”

The customised debt restructuring programme, ESS-C, is intended for SMEs with loans with more than one lender and for whom MinLaw’s Simplified Insolvency Programme and CCS’ SPP Scheme are not suitable. To apply for the ESS-C, SMEs may approach any of their lending banks and finance companies to recommend them to the programme. The current list of banks and finance companies that will offer the ESS-C are:

• Bank of China Limited;
• CIMB Bank Berhad;
• Citibank N.A. and Citibank Singapore Limited;
• DBS Bank Ltd;
• HL Bank;
• Hong Leong Finance Limited;
• The Hongkong and Shanghai Banking Corporation Limited;
• Indian Overseas Bank;
• Industrial and Commercial Bank of China Limited;
• Malayan Banking Berhad and Maybank Singapore Limited;
• Oversea-Chinese Banking Corporation Limited;
• RHB Bank Berhad;
• Sing Investments & Finance Limited;
• Singapura Finance Ltd;
• Standard Chartered Bank (Singapore) Limited; and
• United Overseas Bank Limited.

SMEs will be able to apply for the customised debt restructuring, ESS-C, from 2 November 2020 to 30 June 2021.

EXTENDED SUPPORT SCHEME (ESS)
The ESS is aimed at helping individuals and Small and Medium-sized Enterprises (SMEs) facing cashflow difficulties transition gradually to full loan repayments.

The extended support measures will give such individuals and businesses currently under the Special Financial Relief Programme (SFRP) loan repayment deferrals more time to resume repayments. The support measures will also be available to customers previously not under the SFRP, but who are now facing cashflow challenges. These extended measures will progressively expire over 2021.

As economic activities continue to resume, customers who are able to resume paying your loan instalments in full are encouraged to do so from 1 January 2021, as further deferment increases overall debt. If not, please check your eligibility below and get in touch with your bank to discuss tapping into the schemes.

CONTACT INFORMATION OF BANKS/FIS OFFERING ESS 

The Monetary Authority of Singapore (MAS), together with the Association of Banks in Singapore (ABS) and the Finance Houses Association of Singapore (FHAS), on October 5th announced an extension of support measures to help individuals and Small and Medium-sized Enterprises (SMEs) facing cashflow difficulties transition gradually to full loan repayments. These extended measures will progressively expire over 2021.

Since April this year, banks and finance companies have been providing payment deferrals [1] for individuals and SMEs facing short term challenges in servicing their loan instalments. The various relief measures have helped ease the cashflow pressures faced by these individuals and SMEs, and are set to expire by 31 December 2020.

As economic activities continue to open up, borrowers who are able to resume paying their loan instalments in full should start doing so from 1 January 2021, as further postponement increases their overall debt.

MAS and the financial industry recognise, however, that many individuals and businesses will continue to experience cashflow pressures into early 2021. The extended support measures will give such individuals and businesses currently under loan repayment deferrals more time to resume repayments. The support measures will also be available to borrowers previously not under any payment deferral, but who are now facing cashflow challenges.