Reply to Parliamentary Question on relief measures for SMEs
QUESTION NO 3546
NOTICE PAPER 2081 OF 2020
FOR ORAL ANSWER
Date: For Parliament Sitting on 4 May 2020
Name and Constituency of Member of Parliament
Ms Foo Mee Har, MP, West Coast GRC
To ask the Prime Minister what is the extent to which businesses have been able to benefit from Singapore's COVID-19 financing schemes, which were rolled out to provide them access to credit and improve cash flows, with specifics on (i) total quantum of loans dispersed (ii) number of business loan applications approved (iii) approval rates and (iv) average applicable interest rates, for the period ending 30 April 2020.
Answer by Mr Ong Ye Kung, Minister for Education, on behalf of Mr Tharman Shanmugaratnam, Senior Minister and Minister in charge of MAS:
1. As SMEs are a vital part of our economy, the Monetary Authority of Singapore (MAS) and Enterprise Singapore (ESG) are working closely with the banking sector to ensure that SMEs continue to have access to the financial support they need to tide through this difficult period. This is done through the ESG loan schemes.
2. The loan schemes have seen strong interest. Based on ESG’s data, SME borrowers have applied for more than 2,500 loans amounting to about S$1.9 billion since the beginning of March this year. This is about six times the credit extended over the same period last year. The approval rate of these loan applications has been high, at 90% to 95%.
3. Under the ESG loan schemes, the Government takes 90% of the loss if a loan goes bad, with the banks assuming the remaining 10%. This has helped bring down the credit spread.
4. The ESG loan schemes were further enhanced when MAS launched a new Singapore Dollar facility for the banks and finance companies. It provides them with fully collateralised funding for two years at an interest rate of 0.1% per annum, for the purpose of their loans under the ESG schemes. This funding differs from the existing five-year, uncollateralised funding provided by the Government.
5. Together with the earlier enhancements to the ESG loan schemes, this is expected to bring down interest rates for such loans to 2-3% for most borrowers, compared to 6% or more for most other unsecured working capital loans to SMEs.
6. We have also seen good take-up of the complementary set of relief measures to help SMEs during this period. These measures were announced earlier by MAS and the financial industry. They include enabling SME borrowers with secured loans to defer principal repayments until 31 December 2020. Many SMEs have requested to do so. As of 30 April 2020, more than 2,500 applications have been processed, with nearly all applications approved. More than $4.5 billion of secured loan facilities have benefited from this measure to-date.
7. MAS and ESG will continue to monitor the effectiveness of our measures.