MAS has worked with financial institutions in Singapore to offer for SMEs in need to lower their short-term repayment obligations for their secured loans and to stay insured despite facing financial difficulties. SMEs should enquire on the associated costs and benefits before taking up any of the options.
Defer Payment of Principal on Secured SME Loans
SMEs may apply to their lender to defer principal repayment of their loan until 31 December 2020. SMEs will also be able to extend the tenure of their loans by up to the corresponding principal deferment period if they wish. This relief will be available to SMEs that continue to pay interest and are in good standing with their banks and finance companies (not more than 90 days past due as of 6 April 2020).Lower Interest on SME Loans
SME borrowers will also benefit from lower interest rates on their loans obtained under Enterprise Singapore (ESG)’s Enhanced Enterprise Financing Scheme – and (ESG Loan Schemes). Through the , MAS will provide lower-cost funding to participating financial institutions to support their lending at lower interest rates to SMEs under the ESG Loan Schemes.
Assistance with Insurance Premium Payment
Corporates, including SMEs, may apply to their insurer to pay their company’s general insurance premiums (e.g. property, trade credit, vehicles) in instalments.
Supporting the Implementation of COVID-19 Act
MAS has supported the scoping of the to provide temporary protection to SMEs without impairing interests of banks and Singapore’s role as an international financial centre. The Act covers only contracts that are scheduled. For financial institutions, it would cover only SME loans with specific security located in Singapore, namely commercial or industrial property in Singapore, or plant, machinery or fixed assets in Singapore that are used for business purposes
The contractual rights of banks are not affected, other than the right to enforce the abovementioned security or commence legal action for a default on a loan covered under the Act for a six-month period, from 20 April to 19 October 2020. Banks’ contractual right to charge fees and interest for non-payment or late payment of loan obligations due is unaffected, save for unilateral increases or impositions that are not expressly specified.
SMEs considering to seek the protection of this Act for their security should therefore bear in mind that they may incur late charges and higher interest, and end up paying more in the future. SMEs who face cash flow difficulties should actively engage their banks to explore the options available under the package of relief measures announced by MAS, which include the deferment of principal repayment, with a corresponding waiver of late charges.