Businesses in Singapore are fortunate to have support from the government, banks and finance companies to help ease the financial strain. 

Temporary Bridging Loan Programme

One of the most viable government-backed business financing options to lower short-term repayment obligations is the Temporary Bridging Loan Programme (TBLP)  announced at Solidarity Budget 2020.

This programme offers all Singapore-registered companies that are at least 30% owned by Singaporeans / Permanent Residents, an unsecured business loan of up to: 

• $5 million from 8 April 2020 to 31 March 2021
• $3 million from 1 April 2021 to 30 September 2021

Here’s an overview of the TBLP: 

While interest rates vary from each Participating Financial Institutions (PFIs), FinanceGuru has processed applications for interest rates of as low as 1.3% p.a. simple rate (2.5% effective rate p.a.). Want to know how? Talk to us today.

Other attractive features of the TBLP

Government risk-share

Government provision of 90% risk-share for new applications initiated from 8 April until 31 March 2021. For applications submitted from 1 April 2021 to 30 September 2021, the government will take up 70% risk-share. 

It’s worthwhile to note that you’re still required to provide a 100% Personal Guarantee, and you and your guarantors are still responsible for repaying 100% of the loan amount.

The risk share featured in this instance is a guideline for PFIs when defaults occur. 

According to Enterprise Singapore, PFIs are obligated to follow their standard commercial recovery procedure. This includes the realisation of security before making a claim against Enterprise Singapore for the unrecovered amount in proportion to the risk-share. 

Deferral of principal repayment 

Upon qualification, businesses under this scheme may apply for up to 1-year deferral of principal repayment to help reduce their monthly cash outflow, subject to PFIs’ assessment.

While banks may not commence legal action for a default on a loan during the prescribed 6-month period, they’re still able to charge fees and interest for non-payment or late payment of loan obligations.

Enterprise Financing Schemes

Besides TBLP, eligible companies can apply for the following at the same time:

• Enterprise Financing Scheme – SME Working Capital Loan (EFS WCL)
• Enhanced Enterprise Financing Scheme Trade Loan (Enhanced EFS-TL) 
• Other EFS loans

The Enhanced EFS-WCL has been further enhanced to support loans of up to $1 million, and interest rates are not subject to a cap.

Find out more about other available COVID-19 business support measures here.

Is it possible for business loans to be unsuccessful?

While there are many types of business loans and funding available in Singapore, not every application for a business loan application is always successful. 

Financial Institutions typically look at 4 key business financing criteria:

1. Operational history

Financial institutions often require a business to be in operation for at least 6 months to qualify. 

Newly launched businesses will find securing a business loan to be a challenge.

2. A strong financial track record

To ascertain how established the business is, banks often request documents that feature their annual revenue and average daily bank balance.

3. Business owner’s personal credit score

A poor credit score would conjure questions on the business owner’s ability to repay the loan. 

In such instances, banks may decide to reject the loan application.

4. Adequate local shareholding 

Government-assisted financing is open only to businesses registered in and operating Singapore. 

Business entities are required to have at least 30% local equity held by Singaporeans / Permanent Residents. Unless the business meets this criterion, securing a Government-assisted loan is unlikely.

Given the stipulated processing period, businesses can expect the loan application results in two to three weeks. For more complex cases, processing time may take up to a month.

To avoid the waiting time, businesses can apply for the TBLP multiple times with different PFIs. Alternatively, you can delegate the tedious administrative application process to a Loan Specialist like FinanceGuru.

Our specialist knowledge and long-standing relationships with loan providers can provide you with:

• A comprehensive overview of the wide variety of business loan offerings, credit criteria and interest rates among the various banks and financial institutions available to you.
• Recommendation of the most suitable loan providers to your business, saving you time applying to providers who are a bad match.
• A more favourable loan rate from the provider as the aggregated amount FinanceGuru sources from banks is higher than just one sole application.

Read more about why you should consider taking out your mortgage loan through a loan broker in Singapore here. 

Risk-free loan assessment

Find out more about what loan packages are available for your business. In addition to helping you navigate the best loan option, the panel of FinanceGuru loan specialists are equipped to help you with:

• Facilitating the approval process of your application
• Expediting the application processing timeframe
• Ensuring the preparation and submission of all the necessary documentation

This way, you can focus your attention on the things that matter. Contact us for a no-obligation, risk-free, ZERO-cost loan assessment today.

If you have any further queries, feel free to contact us for a chat. Here at FinanceGuru, we seek to help you better prepare for your finances and the upcoming milestones in your life. Get a non-obligatory assessment and loan product recommendations here. 

The post Keeping businesses going: as low as 1.3% interest rate for unsecured business loan appeared first on FinanceGuru.

On the business front, the pandemic has threatened our global supply chains, disrupted businesses worldwide and crippled the economy. 

Given the economic uncertainties that lie ahead, it’s no doubt that the economic recovery from COVID-19 will be a steep and challenging one. Businesses will require all the help they can receive to weather the pandemic and emerge stronger. This is important because the survival of businesses is crucial to the functioning of society.

Support and relief measures in response to COVID-19

When countries were placed under lockdowns, and safety restrictions were imposed to prevent the spread of COVID-19, businesses suffered both weakened demand and disrupted supply. This gravely affected their profits, which caused them to lay off workers to cut costs. 

Resultantly, unemployed workers experienced significant income loss and reduced spending power. This led to a decrease in consumer demand. If such a situation persists, it’ll only give rise to a vicious downward spiral, to the detriment of society at large.

To mitigate the effects of the global slowdown, governments across the world have stepped in to offer a helping hand, introducing a slew of measures to aid businesses in riding out the storm. Singapore is no exception.

More financial help for businesses in Singapore

Enterprise Singapore (ESG) has rolled out several business support measures to tide businesses across the various sectors through this difficult period. 

These support measures targeted at mitigating costs, providing credit access and regulating cash flows. Relief measures include strengthening of existing financial packages, as well as creating various support initiatives. 

On top of tax rebates and levy waivers, the government has also introduced various programmes and grants under Budget 2020.

Some of the initiatives include:

• Jobs Support Scheme
• Temporary Bridging Loan Programme
• Enterprise Financing Scheme
• Loan Insurance Scheme
• Enterprise Development Grant
• Productivity Solutions Grant

Through these schemes, the government seeks to better cushion the negative financial impacts of COVID-19 on businesses. 

The schemes also serve to help companies develop their business resilience and maintain their competitiveness amidst this period. Let’s take a look at some of these schemes. 

Temporary Bridging Loan Programme

Particularly, local businesses may leverage the Temporary Bridging Loan Programme (TBLP) to their advantage in gaining access to working capital. 

Introduced under the Solidarity Budget 2020, the government takes on 90% risk share on loans granted between 8 April 2020 to 31 March 2021, with a maximum loan of $5 million and interest rate capped at 5% p.a. 

From 1 April 2021 to 30 September 2021, you can take out a maximum loan of $3 million, with the government taking on only 70% risk share. 

The maximum loan tenure is 5 years, of which no principal repayment is required for the first 12 months, but both principal and interest repayment are necessary for the remaining loan tenure. 

Enterprises in need of working capital may apply directly to the Participating Financial Institutions (PFIs) for the loan, subject to certain eligibility criteria.

Here’s a table to breakdown the working capital provided for eligible SMEs:

Enterprise Financing Scheme – SME Working Capital Loan

For enterprises which require additional funds on top of those provided by the TBLP, they may apply for the Enhanced Enterprise Financing Scheme – SME Working Capital Loan (EFS-WCL).

Under this scheme, enterprises can take out a maximum loan of $1 million, subject to certain eligibility criteria. 

Both the TBLP and the EFS-WCL are supported by a new facility introduced by the Monetary Authority of Singapore (MAS) — near-zero interest rate loans (0.1 per cent per annum for a two-year tenure).

Navigating the post-COVID-19 world

TBLP and EFS-WCL are but just 2 of the multiple schemes that have been rolled out. A plethora of other business support measures are available to assist companies and employers, all of which aim to poise businesses for recovery. 

In addition to applying for financial assistance, what businesses can and should do, in the meantime, is to utilise the current downtime to build up their assets.

After all, COVID-19 has given birth to a new digital-centric era. As companies seek to navigate the post-COVID-19 world, they’ll have to grapple with uncertain market conditions, evolving market trends and changing consumer behaviours. 

They must chart a new path for the journey ahead. In preparation, businesses should emphasise the restructuring of their business models, the adoption of digitalisation, and upskilling their workforce. 

Otherwise, they may risk getting left behind as a new wave of digitalisation sweeps by.

Read about COVID-19 relief measure extension on home loans here.

If you have any further queries, feel free to contact us for a chat. Here at FinanceGuru, we seek to help you better prepare for your finances and the upcoming milestones in your life. Get a non-obligatory assessment and loan product recommendations here.

The post COVID-19 business support measures: Offering businesses a much-needed helping hand appeared first on FinanceGuru.