- August 2, 2020
- Posted by: avantconsulting
- Categories: Recommended Reads, Singapore Economy, SME Loans
11 Reasons to tap on Singapore Temporary Bridging Loan – The year 2020 will definitely go down as the year where the world economy came to an abrupt stop and this also will lead to many structural changes in the economy.
The Singapore economy was very badly hit by the slow down in global trade and together with the effects of a country wide lockdown and closure of activities, have led to the sharp downturn that we are experiencing right now.
Through the multiple budgets delivered by our Deputy Prime Minister Mr Heng Swee Keat, who is also Finance Minister of Singapore, many schemes have come about to save the economy.
After his announcement in the budget, the banks in Singapore have come up with a plan together with Enterprise Singapore to help the businesses in Singapore to pull through such tough times.
We will like to take this change to share some of the “Reasons to tap on Singapore Temporary Bridging Loan” that we have come up with.
1. Lowest Interest Rates in decades
The effective interest rates for the Singapore Temporary Bridging Loan is capped at 5% but most local banks in Singapore are actually issuing loans for this programme at 2.5% or in some cases even loan at 1.5% or 2% Effective interest rates.
Such interest rates have never been seen in Singapore.
At this rates, the actual per annum interest rate is as low as 0.785% to an average of 1.29% per annum.
This rates are as close to zero percent loan amounts that you will see in awhile as the economy requires the funds to keep on going and to prevent job losses.
This can only be achieved as the central bank of Singapore, the Monetary Authority of Singapore has decided to cut rates down to near zero to lend to banks so that the banks can do so to lenders in Singapore at such low rates.
This is a once in a lifetime crisis so we do not expect to ever see such low interest rates ever again.
2. Highest Loan Quantum in decades
For those who are familiar with loans through Enterprise Singapore, the working capital loan Programme used to be only up to $300,000 per borrowing group.
For this new Singapore Temporary Bridging Loan Programme, you are able to loan up to $5 million SGD per borrower group. This being those companies that have corporate shareholdings and the group to loaning above $5 Million as a whole.
This means that companies can go to a few more banks to reach out to more funds and to help their businesses to tide through this tough times.
Each bank is also capped at $1 Million for this loan to an individual company.
It also means that medium size businesses are able to get a decent sized loan unlike in the past when it was capped at $300,000. Which is barely enough for businesses that are medium to large sized.
Most businesses may not qualify for the full $5 Million SGD but the fact that the quantum is much higher means you could actually loan more to rebuild your business.
Qualification for higher loan quantum are still assessed based on the financial strength of the companies and also directors that will be acting as guarantors.
3. Maximum Tenure of 5 years
The loan tenure means how long you can take to repay the loans.
This is a good thing because you will have 5 years to use the cash to build your business before you will need to slow return everything.
This decreases the load on the company and also allows the business to plan its cash flow a bit better.
5 years is a very comfortable term for a business loan and also a stretch that will mean that the interest will not add up to too big a sum.
Most businesses will use this funds for up to 5 years but sometimes businesses only need it to push through this tough times and use it for only 2 years tenure.
Shorter Tenures could also mean lower interest rates that can be negotiated through us as your loan representatives.
The flexibility in the tenure allows you to decide how long you want to be paying off the loan repayments.
4. No Repayment Penalty on your loan redemption
One of the best things available for this loan is that it really positions itself as an emergency loan.
When things get better and when the economy recovers. Most business will not need the loan.
This is great because you can repay the amount anytime when you find that you do not need that additional cash anymore.
You could just take the loan and return it when you do not need it anymore or when the economy is back to normal.
With zero penalty, most businesses can take this low interest Bridging Loan and set it aside as standby and if they do not need it, just inform the bank with a 1 month notice and clear it off from their books.
This is truly a great move by the banks as a crisis loan, so that it does not penalize those businesses that really are taking this amount out for standby.
5. Up to 1 year deferral of Principal Repayment
One of our favorite moves by the MAS to enforce this as well.
Most business owners will definitely have revenue issues.
The fact that you do not need to pay principal for the first year is great for a downturn year. For most businesses, they might see their revenue hit and this will also mean that the cash is used mostly to keep employment going and to keep the company afloat.
This is very helpful for business to have time to tide through the tough times and when things get better to start paying off the loan.
6. Easier approval due to higher risk sharing
To encourage the banks to help out more SME businesses that are facing tough cash flow issues, the government have decided to take on 90% of the risk share in the case of a default. But this does not mean that you can go ahead and default and expect the government to foot the bill.
The borrower company or business is still ultimately 100% responsible for repaying the loan amounts. If the borrower is not able to, the guarantors are to clear the debts of the borrower, this is something that most business owners will need to be aware of.
If a default situation happens, the financial institution that made the loan are to follow recovery procedures including realizing of security.
Only after which the financial institutions can make a claim against Enterprise Singapore for the un-recovered amounts for risk-sharing purposes.
You should try to get in on the loan early as the banks are tasked by the government to help as much as possible.
7. Sole Proprietorship, Partnerships & Limited Liability Partnership are eligible to apply
To help the entire economy to tide through the down turn, all forms of business and companies are allowed to take part in the Singapore Temporary Bridging Loan Programme.
For some banks, there are minimum criteria in place for revenue amounts and also for the company to have a minimum number of year of operations.
But there are no restriction on whether they are an incorporated Singapore Company or not.
Do note that in the case of Sole Proprietors or Partnerships, the SP or the Partners will become guarantors to the loans.
This also means the Mom & Pop businesses will be able to take up loans to help them through this tough period of time.
Same for the Limited Liability Partners as well as the Directors of Private Limited Companies in acting as guarantors to the loan.
8. Up to 15 Banks & Financial Institutions taking part
Your business and yourself might have some bad records with certain banks due to a long history in business and having difficulties along the way.
The fact is that the banks and financial institution may not want to work with you if there are such histories, but the really good thing this time round is there are a total of 16 banks and financial institutions taking part in this programme.
Interest rates and loan tenures may vary with the full local banks giving the best terms.
This gives you the choice of the following 15 banks and financial institutions:
- United Overseas Bank (UOB)
- Development Bank of Singapore (DBS)
- Overseas Chinese Bank Corporation (OCBC)
- Hong Kong Shanghai Bank Corporation (HSBC)
- Malayan Bank (MAYBANK)
- Commerce International Merchant Bankers Berhad (CIMB)
- Standard Chartered Bank (SCB)
- Ethoz Capital
- IFS Capital
- Hong Leong Finance
- ORIX Leasing Limited
- Goldbell Financial Services
- Sing Investments & Finance Limited
- Singapura Finance
It might be really tiring to reach out to so many banks and financial institutions, we can help you with this and make things easier for you for a small fee.
9. Only available until 31st March 2021
The fact that the TBL is created to help business tide through this Covid-19 induced slowdown, we are unlikely to see it extend beyond when we likely will get a vaccine. The government will review this again as the 31st March 2021 deadline.
We are also hoping that the Covid-19 Pandemic will be placed under control in time to come and the fact is that this will not need to be extended.
With this in place, we are hoping to see more people taking this unprecedented low interest loan to tide through tough times and to have enough cash flow to prepare for the rebound.
As banks will have risk levels to maintain, the likelihood of high loan quantum will start to fall as time goes on and banks likely face more defaults.
We will strongly recommend for those who have not tried to go for the loan to try now.
Do not miss out on this opportunity of a life time of having the lowest interest loan in Singapore.
10. Banks will slowly tighten their lending criteria
With the Covid-19 likely to go on for awhile, most banks might tighten criteria so that to limit exposure.
The fact is, banks are also businesses and taking part in this program, for those companies that have good credit and background, they will likely see approval early on in the year and will have gain access.
Some may face defaults and some may have difficulties making full payment.
With such issues coming up, new to bank customers or those who might think that they do not need the funds in the earlier months of 2020 might end up facing getting any money at all as things progress.
Even as this article is posted, there are already some restrictions on certain industry of business and this is usually decided internally.
Especially if you are new to the bank plus you are from a high risk sector. As we speak, more and more restrictions come into place.
11. More industries are being listed as “High Risk”
Banks are businesses too and together with it comes risk assessors.
The banks in Singapore has heeded the directions of the Singapore Government to assist Singapore companies in cash flow and has lend out a large sum of money to most sectors.
There are sectors that are badly hit and those that have to face tourist, such as those in F&B as well as hospitality are facing issues with cash flow that might not improve any time soon.
As more companies take loans and start to default, the bank faces the issue of having to put more sectors and industries into their high risk category.
This means the loan quantum will reduce for applications in this few sectors or the bank might even want to completely avoid this sectors for a short period of time.
Thank you for reading our article on “Reasons to tap on Singapore Temporary Bridging Loan”.
Avant Consulting is the leading Singapore Business Bank Loan Broker. We are able to assist our clients in acquiring the Singapore Temporary Bridging Loan at attractive rates as well as assisting in fighting for zero administrative fees.
Avant Consulting has a team of SME Loan Consultants and Brokers to assist you, if you need any help our team of 10 will be able to stand by and help you out.
We will be glad to work with your business in helping your get quick approval for your Singapore Corporate Business Loans.
We also provide help for the following if you need help:
- Singapore Invoice Factoring
- Singapore Commodities Trade Line Financing
- Residential & Commercial Mortgage Refinancing
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