Ravi Chandran
Financing support measures for enterprises extended to support continuity of cashflow and trade activities for business recovery
Enterprise Singapore (ESG) said in early July that it will extend the Temporary Bridging Loan Programme (TBLP) and the enhanced Enterprise Financing Scheme – Trade Loan (EFS-TL) for another six months from 1 October 2021 to 31 March 2022. The parameters for both schemes remain unchanged – including the government risk-share of 70% as well as the maximum loan quantum of S$3 million for TBLP and S$10 million for EFS-TL.
The extension of the two schemes will enable enterprises to access credit for cashflow and trade activities and continue to capture new growth opportunities as Singapore transits into a new normal. In partnership with ESG, MAS will also extend the MAS SGD Facility accordingly, to continue to offer lower cost of funds to banks and finance companies to support their lending to local enterprises.
Since the start of 2020, over S$22 billion worth of financing support measures to over 25,000 enterprises were supported under ESG’s financing schemes.
99% of the recipients were small and medium enterprises (SMEs). About half were in wholesale trade (20%), construction (16%) and manufacturing (13%), with other sectors such as services and retail also supported.
ESG is also working with industry partners to provide additional resources to guide SMEs on their financing needs and strengthen their financial knowledge, which is critical amid the current uncertain business climate. This includes stationing Special Advisors at SME Centres to provide advisory support to guide SMEs on their financing needs. ESG has also co-developed a course with PwC for SME leaders to acquire effective financial management skills to help them better strategise and grow their businesses in the new normal.
Mr Png Cheong Boon, Chief Executive Officer of Enterprise Singapore, said, “Over the past year, enterprises have leveraged the financing offered through our loan schemes to sustain their immediate operations. However, uncertainties remain even as we work towards a new normal with the COVID-19 situation. The extension of the TBLP and EFSTL is meant to ensure that businesses continue to have access to financing so that they can upgrade their operations, build new business capabilities, pivot to new business models and grow sustainably.”
Mr Paul Ho, chief officer at iCompareLoan, said: “bridging loans are great financing support measures, but be careful before you dive in. Bridging loans are expensive and are usually considered to be a last resort.”
“If a bridging loan can tide you over in the short term then the extra expense may save you from losing money already spent in the purchase process, as well as reducing stress, if you do it for the wrong reasons you may end up in serious financial difficulty.”
Paul Ho
In May last year, UOB announced that it had approved S$4 billion in loans under the UOB Temporary Bridging Loan Programme (TBLP) since the government increased its risk-share of such loans to 90 per cent a month ago.
UOB is a leading bank in Asia with a global network of more than 500 offices in 19 countries and territories in Asia Pacific, Europe and North America. Since its incorporation in 1935, UOB has grown organically and through a series of strategic acquisitions. UOB is rated among the world’s top banks: Aa1 by Moody’s Investors Service and AA- by both S&P Global Ratings and Fitch Ratings. In Asia, UOB operates through its head office in Singapore and banking subsidiaries in China, Indonesia, Malaysia, Thailand and Vietnam, as well as branches and representative offices across the region.
The loans were extended to the Bank’s mid-sized enterprise clients in sectors which have been hard hit by the COVID-19 pandemic including construction, consumer staples, retail and hospitality. Firms in many sectors have been required to stop activities and have been affected by the drop in overall consumption as people stay home during the “circuit breaker” period.
To help its clients access much-needed funding at lower interest rates, UOB has also tapped the Monetary Authority of Singapore (MAS) SGD Facility for Enterprise Singapore (ESG) Loans (the Facility). UOB Temporary Bridging Loan Programme is the first of its kind to access the Facility and is passing on the funding cost savings in full to its clients.
Mr Eric Tham, Head of Group Commercial Banking, UOB, said, “As the COVID-19 pandemic continues to affect businesses’ day-to-day operations, many mid-sized firms are finding themselves at a critical juncture. These firms tend to have hundreds of employees and high overhead fixed costs, making it imperative for them to access additional liquidity quickly.
“Since the start of the COVID-19 pandemic, we have been helping SMEs overcome the shock to their business. We have helped our clients overcome their immediate liquidity challenges by providing loan moratoria and allowing them to repay loan interest only. Through our close collaboration with the MAS and ESG, we have helped clients access funding under the government-assisted schemes quickly and at much lower interest rates than before the pandemic. We hope that through the tripartite effort between MAS, ESG and UOB, we will be able to help these companies tide over the pandemic and plan for the eventual return to more normal operating conditions.”
Digital application process to help clients access funding quickly and easily for financing support measures
To ensure that funds can be disbursed as quickly as possible, UOB has also digitalised the entire loan application process for clients to receive their funds in about a week.
Eng Lee Engineering Pte Ltd is one of the clients that UOB has helped to access TBLP funding. Since the start of the COVID-19 pandemic, the construction company has had to manage several challenges, including having to stop operations and to step up its measures to ensure the safety and well-being of their foreign workers residing at dormitories. With expenses continuing to pile up while operations are kept on hold, the firm wanted to secure additional funding to ensure that it has the cash flow needed to manage expenses.
Mr Looi Bock Heay, Managing Director, Eng Lee Engineering Pte Ltd, said, “The COVID-19 pandemic has impacted our business greatly. Not only are all our projects at a standstill, we don’t know when we can resume normal operations. This puts a huge strain on our cash flow. However, with the government’s initiatives and UOB’s proactive and timely support, I secured a loan under the government-assisted scheme quickly and at a lower interest rate. With the additional financing, I can now focus on managing our immediate challenges and planning for the eventual recovery with more confidence.”
Another client that has tapped on the UOB Temporary Bridging Loan Programme is Consort Bunkers Pte Ltd, a bunkering supplier and logistics and barging services provider. In addition to the challenges faced by the industry from a slowdown in global trade volume, the company’s operations have also been disrupted by the “circuit breaker” measures.
Mr S.K. Yeo, Managing Director and Founder, Consort Bunkers Pte Ltd, said, “This period has been particularly trying for us as we face the twin challenges of COVID-19 and a weak sentiment perpetuated by the fall in oil prices. In order to ride out this storm, we need to ensure that we have sufficient working capital to run our business smoothly. From the start of the COVID-19 pandemic, UOB has been steadfast in its support, constantly keeping in close contact with us. When the government announced additional measures to help businesses access lower-cost financing, the Bank was quick to help us apply for it. The digital application process was hassle-free and I was able to access the funds about a week after applying for it. We are glad to be able to count on the support of our long-time financial partner UOB, as we navigate the uncertainties ahead.”
In addition to helping its clients tap funding under the government-assisted schemes, the Bank also announced S$3 billion in relief assistance for those affected by COVID-194. The measures include allowing affected businesses to rework their principal repayments and to service only their loan interest for up to one year and offering financing liquidity against mortgage security.
