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Temporary bridging loan programme for SMEs

It’s no secret that Covid-19 has hit businesses in Singapore hard. And while major corporations may have the resources to tide over the crisis, the same cannot be said for SMEs.

Without the major cash reserves and large capital assets of large corporations, small businesses find it more challenging to secure additional financing in trying economic times, and many have a more difficult time surviving a recession.

To help businesses, especially SMEs survive this period of economic hardship, the Singapore government has rolled out a slew of measures to provide some financial assistance. One such lifeline is the Temporary Bridging Loan Programme (TBLP).

What’s the Temporary Bridging Loan Programme?

The Temporary Bridging Loan Programme is a Government-assisted loan programme. It provides Singapore companies with low cost and low risks money. 

In effect from now to Sept 30 next year, the programme helps companies manage immediate cash flow needs as well as different business expenses — including workers’ salaries, rental, marketing costs and raw materials.

How much can you borrow with the TBLP?

Till March 31, 2021, eligible enterprises may borrow up to $5 million under the TBLP, with the interest rate capped at 5% p.a., from Participating Financial Institutions (PFIs); if you are applying from April 1, 2021, to September 30, 2021, your maximum loan quantum will be lowered to $3 million. If your company’s credit history and financial performance are good, you may be able to enjoy an interest rate as low as 3% per annum or less.

Additionally, the Government will provide 90% risk-share on loans for new applications initiated from now until March 31, 2021; its risk share will be decreased to 70% from April 1, 2021 to September 30, 2021. The borrower is responsible to repay 100% of the loan amount. Should a default occur, the PFIs are obligated to follow their standard commercial recovery procedure, including the realisation of security. If there is an unrecovered amount in proportion to the risk-share, the PFIs can then make a claim against Enterprise Singapore.

Let’s say your company takes on a loan of $3 million but is unable to pay up and has to default. Your PFI(s) will initiate their standard commercial recovery procedure, but if they are only able to recover a partial amount of $500,000 from you, they will claim $2.25 million (90% of the remaining amount) from Enterprise Singapore.

Eligible enterprises under the TBLP may also apply for deferral of principal repayment to help them reduce their monthly cash outflow, subject to assessment by the PFIs.

SMEs that require help beyond the TBLP can also tap on the Enhanced EFS-WCL, which has been further enhanced to support loans of up to S$1 million. Interest rates are not subject to a cap. 

Who is eligible to apply?

The TBLP is a government-assisted loan, so only Singapore companies may apply for it. Your company will have to fulfil the following requirements as prescribed by the Government to be eligible.

Eligibility conditions of temporary bridging loan programme

  1. At least 30% of shares held by Singaporeans or Permanent Residents; and

  2. Registered and physically present in Singapore.

In addition to meeting the above criteria, Your business will also be subject to the standard credit assessment criteria of the PFIs’ you are applying to for the loan.

To help small businesses, no collateral is needed to secure the loan, but banks will require a 100% Personal Guarantee. A PG is not only a means of security but signals a commitment by the guarantor(s) that they are committed to the loan obligation. 

Where can I apply for temporary bridging loan programme?

Your company can approach different PFIs to apply for the loan. However, note that the total aggregate amount borrowed under the scheme from different PFIs is capped at the maximum amount of $5 million or $3 million depending on the date of application.

For greater convenience and ease of application, it would make the most sense for business owners to apply with the bank that they hold a business account with. 

Besides the TBLP, companies can apply for the Enhanced EFS-WCL, Enhanced Enterprise Financing Scheme Trade Loan (Enhanced EFS-TL) and other EFS loans at the same time if they meet the criteria for each scheme, subject to assessment by PFIs.

Have more questions or experiencing issues applying for the TBLP? Enterprises which require further support may approach Enterprise Singapore at 6898-1800 or enquiry@enterprisesg.gov.sg for assistance.

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