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Singapore banks, finance companies to extend debt relief for individuals, SMEs

Janet Ong
·Finance Editor
·3-min read
Singapore - November 15, 2018: Monetary Authority of Singapore MAS. Monetary Authority of Singapore MAS is Singapores central bank and financial regulatory authority established in 1971.
(PHOTO: Getty Creative)

SINGAPORE — Singapore banks and finance companies will extend debt relief for individuals and small- and medium-sized enterprises (SMEs) beyond the end of the year to support borrowers affected by the coronavirus pandemic.

The extension of the various relief measures, set to expire by 31 December 2020 and will now progressively end over 2021, was announced by Deputy Prime Minister and Finance Minister Heng Sweet Keat in a Ministerial Statement in Parliament on Monday (5 October).

In a statement, the Monetary Authority of Singapore (MAS) said that it, and the financial industry, recognise that many individuals and businesses will continue to experience cashflow pressures into early 2021 and the extended support measures will give them more time to resume repayments.

As of August, more than S$11.5 billion of SME loans and about S$29 billion of property loans had been deferred, according to MAS data.

Individuals with property loans can apply to temporarily reduce their loan repayments to 60 per cent of their monthly instalments for as long as nine months but not exceeding 31 December 2021. Applicants will have to prove that their incomes have been impacted by at least 25 per cent and they are not in arrears for more than 90 days on their property loan payments.

Individuals who are servicing renovation and student loans can apply to extend their loan tenures by up to three years, so as to lower their monthly repayments, the MAS said.

Those with difficulties repaying their unsecured revolving credit facilities may apply to their lenders till 30 June to convert their outstanding balances to term loans at lower interest rates.

“We want to continue providing relief to borrowers facing cash flow challenges while encouraging them to resume loan repayments to the extent they are able to, so that they do not accumulate too much debt,” MAS managing director Ravi Menon said.

Support for SMEs

For SMEs, there will be two support schemes available.

The first is the Extended Support Scheme – Standardised (ESS-S) – where SMEs may apply to defer 80 per cent of principal payments on their secured loans from banks or finance companies, as well as loans granted under the Enterprise Singapore’s Enhanced Working Capital Loan Scheme and Temporary Bridging Loan Programme.

The SMEs in tier 1 and tier 2 sectors, which include the hard-hit aviation and aerospace, as well as tourism industries, can apply to defer 80 per cent of principal from 1 January 2021 to 30 June 2021. SMEs in other sectors can do the same from 1 January 2021 to 31 March 2021.

MAS said this relief will be available to all SMEs that are “in good standing” with their banks and finance companies, defined as not having arrears on all loan payments for more than 30 days. Those whose loans have been granted principal moratorium should also not have overdue interest payments for those loans.

Banks and finance companies are also developing an Extended Support Scheme – Customised (ESS-C) – to help SME borrowers restructure their loans across multiple financial institutions. More details will be provided in the coming weeks.

Singapore has so far pledged about S$100 billion in COVID-19 support measures to support the economy amid the fallout from the pandemic.

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