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Cash flow support for SMEs boosted as DBS upsizes digital business loan

Ravi Philemon

DBS further boosts its cash flow support for SMEs, upsizes collateral-free digital business loan to SGD 200,000 – Quadrupling of original loan quantum will provide SMEs access to substantial working capital and cash flow support to weather economic storm

DBS on April 7 announced that it will further bolster its liquidity relief support for SMEs impacted by COVID-19 by increasing the quantum of its Digital Business Loan to SGD 200,000. This is double the upsized SGD 100,000 quantum announced on 3 April 2020, and four times the original quantum of SGD 50,000 when the relief measure was first introduced on 26 February 2020.

Substantial cash flow support to weather fallout from Covid-19

Joyce Tee, Group Head of SME Banking, DBS, said, “DBS is fully supportive of the newly announced measures in the Solidarity Budget to protect lives and livelihoods amidst this COVID-19 crisis. DBS stands shoulder to shoulder with our customers, and today, we will be further ramping up our support for the SME community. We hope that by significantly beefing up the Digital Business Loan, SMEs can now access even more substantial working capital support to weather the economic fallout from COVID-19.”

The Digital Business Loan will continue to be collateral-free, with SME clients needing to service only interest for the first 12 months, up from the original three-month interest servicing period announced on 26 February 2020. DBS will continue to waive all processing fees, usually pegged at 1% of the loan quantum associated with this loan.

Today’s announcement is in addition to DBS’ third round of liquidity relief measures for SMEs announced on 3 April 2020, which includes the introduction of a nine-month principal repayment moratorium for SMEs refinancing their commercial property loans with DBS.

The Digital Business Loan adds to the raft of relief measures that DBS has made available to SMEs, including a six-month principal repayment moratorium for existing SME property loans, and an extension of import facilities of up to 60 days to act as immediate cash flow support.

Since the launch of the DBS F&B Digital Relief Package two weeks ago to help F&B establishments tap new income streams by building their online presence in just three days. DBS is in the process of onboarding more than 70 F&B businesses from household chains to hotels, standalone cafes and restaurants which combined, number more than 100 F&B outlets.

Tee added that the bank will continue engaging its SMEs and industry partners to address the specific needs of different sectors during this period. It aims to introduce more of such targeted relief packages in the coming weeks to support different SME segments.

DBS has also begun advising SME customers keen on tapping the relief measures announced by the Monetary Authority of Singapore on 31 March 2020. These include allowing SMEs banking with DBS to choose to defer principal payments on all secured term loans up to 31 December 2020, subject to eligibility. 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 are not more than 90 days past due as of 6 April 2020.

Cash flow support can be obtained with Enterprise Singapore’s SME Working Capital Loan.

MAXIMUM LOAN QUANTUM S$1 million / borrower

Note: Overall loan exposure limit of S$50 million per borrower group across all areas.

MAXIMUM REPAYMENT PERIOD 5 years
RISK-SHARE The borrower is responsible to repay 100% of the loan amount. When defaults occur, the Participating Financial Institutions (PFIs) are obligated to follow their standard commercial recovery procedure, including the realisation of security, before they can make a claim against Enterprise Singapore for the unrecovered amount in proportion to the risk-share.
INTEREST RATE Subject to the PFIs’ assessments of risks involved.

(Note: As announced at Solidarity Budget 2020, the Enterprise Financing Scheme – SME Working Capital Loan (EFS-WCL) is enhanced to help SMEs with their working capital needs said Enterprise Singapore. The maximum loan quantum was raised from $300,000 to $1 million to help finance operational cashflow needs of SMEs. Risk-share was also increased to 90% (from 50% and 70% for young companies) for new applications initiated from 8 April 2020 until 31 March 2021. )

cash flow support

Image credit: YouTube

Enterprises under the Enhanced EFS-WCL may apply for up to 1 year deferral of principal repayment to help manage their debt and finance operational cashflow needs, subject to assessment by the PFIs.

Whether you are planning to finance operational cashflow needs, develop new capabilities, create new products or expand your business footprint overseas, having access to the right financing is crucial to realise your growth ambitions.

With effect from 29 Oct 2019, Enterprise Singapore’s existing financing schemes will be streamlined into one umbrella scheme known as the Enterprise Financing Scheme (EFS). EFS will enable Singapore enterprises to access financing more readily throughout their various stages of growth.

It covers six areas to address enterprises’ financing needs. Enterprise Singapore will share the loan default risk in the event of enterprise insolvency with the Participating Financial Institutions.

  • SME Working Capital Loan – Finance daily operational cashflow needs.
  • SME Fixed Assets Loan – Finance the investment of domestic and overseas fixed assets.
  • Venture Debt Loan – Finance the growth of innovative enterprises using Venture Debt and Warrants.
  • Trade Loan – Finance trade needs.
  • Project Loan – Finance the fulfillment of secured overseas projects.
  • Mergers & Acquisitions Loan – Finance the acquisition of target enterprises with the intent of internationalisation.

A higher risk share will be considered for the following:

  • Young companies within 5 years from inception; and
  • Markets with Standard & Poor’s (S&P) ratings of below BBB- or are not rated.
    (In light of COVID-19, the food & beverage, retail and tourism establishments are required to comply with the Safe Distancing measures to be eligible for EFS.)

Mr Paul Ho, chief Mortgage Officer at iCompareLoan, said: “As a high number of applications for SME Loans are unsuccessful, it is important for passionate business-owners to work with trusted hands, and people who know the industry. Personal loans should not be off the list of considerations if they are really passionate about their business but need cash flow support.”

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