It is undeniable that COVID-19 has affected people and businesses all over the world since it emerged in December 2019.
In Singapore, business has dwindled – major shopping malls, tourist sites and food chains have experienced a huge fall in patronage.
If you are an SME business owner whose business has been affected by the virus outbreak, you may be frantically looking for business loans to bridge your cash flow problems. However, do not borrow in haste. First, take some time to ascertain if you really need a loan in the first place.
Fixed vs Variable Costs
When considering whether or not to take up a loan, you should first know the fixed and variable costs that you incur every month. You may want to consider borrowing only when your current income is unable to cover the amount of fixed costs (e.g. rental, payroll, existing loans) or immediate costs that would affect your business operations.
At the same time, it is important to gauge whether you are able to repay the loan or take up a new loan when you have an existing one. The last thing you want is to be overwhelmed with debt.
Refinancing Your Existing Loans
Before taking up a new loan, look at your current loan (if any) and engage other financial institutions to see if you can refinance your loan (e.g. get a better interest rate or an extended tenor). This way, you will be able to save some money and better pace your repayments without taking up a new loan.
Over the past few weeks, several landlords such as Capitaland, Mapletree Commercial Trust (MCT), Changi Airport Group and some financial institutions have rolled out relief measures for SMEs to cushion the impact of COVID-19.
We list out the COVID-19 programmes from the government, banks and private financial institutions:
1. Government-backed Schemes
In the recent Budget 2020, the government set up several schemes under Enterprise Singapore to help SMEs overcome this difficult period:
a. Temporary Bridging Loan for Tourism Sector Enterprises
This financing support is available for enterprises in the tourism industry from March 2020. Eligible SMEs can borrow up to $5m capped at an interest rate of 5%.
b. Enterprise Financing Scheme – SME Working Capital Loan (SME WCL)
For this scheme, SMEs are able to loan up to $600,000 per borrower to bridge their working capital gap.
c. Section 13H and the Fund Management Incentive
The enhanced version of these two schemes will be launched in April 2020. It aims to encourage investments in Singapore-based companies and start-ups. More information pertaining to this scheme will be announced in March 2020.
DBS Bank put forward a six-month debt moratorium on principal repayments for property loans to SMEs.
UOB Bank has set aside $3b to help its corporate clients bridge their working capital gaps by offering them loans of up to $5m and offering financing liquidity against mortgage security.
Standard Chartered Bank also implemented a waiver on late fees and default fees, and reduced charges on mortgages and restructuring costs.
Apart from the above, the financial institutions mentioned below have allocated specific funds to help cash-strapped SMEs affected by COVID-19:
In view of the COVID-19 crisis, CIMB Bank has introduced three schemes to help businesses with their liquidity crunch.
SMEs are eligible to apply for BizAssist, a term loan that grants businesses up to $600,000 to help them bridge their working capital gaps for up to 5 years.
The C-19 scheme is a term loan meant for SMEs and non-SMEs in the tourism industry. They are eligible to loan up to $1m for a maximum of 5 years.
c. CIMB e-Supply Chain Financing Program
With up to $100m set aside, this programme aims to help companies that need longer credit terms from their suppliers to conserve cash flow.
3. Other Financial Institutions
On 15th February 2020, John Lim's family office, ARA, Straits Trading partnered with Minterest to set up a $5m Help Fund for SMEs that are facing cash flow problems. Through this initiative, SMEs are able to take up to $50,000 for a maximum period of up to 6 months at an interest rate of 0.5% and an admin fee of 2%.
b. The Helping Our Promising Enterprises (Hope) Fund
The Hope Fund is a fund initiated by Goldbell Group, Apricot Capital, Ho Lee Group, Paradise Group, Sing Lun Group and Soilbuild Group and the Singapore Business Federation Young Business Leaders Network. SMEs are able to apply for a fixed loan of $50,000 at 0.5% to 0.75% per month with a tenor of up to 12 months.
We fully understand the problems that SMEs are facing amidst the ongoing pandemic. Lendingpot provides free consultations to SMEs – we will guide them on how to obtain business loans or/and refinance their existing loans.
SMEs that are searching for a business loan can apply on our Business Loan Marketplace, Lendingpot.sg. They can have access to over 45 financial institutions (FIs) with just one business loan application. Within a short span of time, SMEs will get their loan requests assessed and relationship managers from these FIs will pitch solutions to them according to their business needs.
Contact us at firstname.lastname@example.org.
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Standard Chartered Bank
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Singapore Business Federation
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Lendingpot.sg operates a Business Loan Marketplace that allows an SME to connect to multiple lenders with just one application, allowing the SME to know who its prospective lenders are and the rates that they offer, in a very short time.
Jennifer loves helping SMEs in their business growth journey. She is also an epicurean and has perpetual wanderlust. During the weekend, she weaves poems out of thin air and buries herself in books.