The loans are here to help firms tide over the Covid-19 Crisis.

Over 1,200 companies have successfully taken government assisted loans, amounting to loans more than $490 million under the Enhanced Enterprise Financing Scheme – namely the SME Working Capital Loan and Temporary Bridging Loan Programme.

The figures are encouraging, but is not wholly representative of the entirety of all the SMEs that might still require help. While it is heartening that there are certain financial packages available for business owners… many have yet to take action.

For all you business owners out there, here is a breakdown of the 2 schemes under the Enhanced Enterprise Financing Scheme, summarised by

Temporary Bridging Loan Programme 

The main focus Temporary Bridging Loan Programme is to help local companies address their immediate cash flow requirements. It features the following conditions:

  • Up to $5,000,000 loan
  • Government to take 90% risk share of loan (with financial institutions)
  • Interest rate capped at 5%
  • Maximum repayment period up to 5 years.

Deputy Prime Minister and Finance Minister Heng Swee Keat introduced the Temporary Bridging Loan Programme for a year to assist businesses in the tourism sector with their cash flow.

He expanded the programme  last month, allowing the funds to be 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.

SME Working Capital Loan

The SME Working Capital Loan, on the other hand, is mainly for companies that require more working capital beyond the programme. It features the following conditions:

  • Up to $1,000,000 loan
  • Government to take 90% risk share of loan (with financial institutions)
  • Maximum repayment period up to 5 years
  • Interest rate subject to PFI’s risk assessment

SME Working Capital Loan component will also be enhanced for one year with the maximum loan quantum being doubled to $600,000 while the Government’s risk-share on the loans will be raised to 80 per cent from the current 50 per cent to 70 per cent. With effect from April 1, the maximumm loan quantum has been increased t $1 million, up from the initial $600,000 cap announced.

On April 20, Monetary Authority of Singapore (MAS) and ESG announced its offering of near-zero interest rate loans to eligible banks (0.1 per cent per annum for a two-year tenor)  to support SME lending under ESG schemes.

The initiative will also help to lower the cost of loans for the Enhanced Enterprise Financing Scheme.

How does this affect you?

If you are a business owner, this might be the best time to take on a business loan. After all, the financial markets have not seen this levels of interest rates in years. 

Uncertainty is at every corner, and there is no telling what may or may not happen in the coming few months. The Singapore Government has dipped into its reserves beyond expectations and there is no certainty that they will keep doing so to extend even more financial assistance to businesses.

This means that technically, the amount of monetary support the government can give is limited. After all, they are already taking 90% risk share of these high risk loans. So if you are still waiting on the sidelines, hoping that you can tide through this crisis until a vaccine comes around and all things will go back to normal, you are gambling this opportunity away.

To learn more about the bargain interest rates right now and the schemes offered, simply click on the contact button above and we will be more than happy to assist you.

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