The COVID-19 pandemic hit the world hard. It wasn’t just a major health issue; it also had drastic effects on the economy. As a result, 2020 saw a paradigm shift of businesses trying their luck on the digital medium, with some not quite making it.
In recognition of the tough times, Enterprise Singapore (a Singapore government agency in the business of addressing business needs) led the charge in providing a secure financing option to support businesses struggling through the pandemic by implementing two business loan packages–the Temporary Bridging Loan Programme (TBLP), and the SME Working Capital Loan (WCL).
With the help of participating financial institutions, both are meant to function as support loans for any business and eligible SMEs (in the case of WCL) during this challenging period of economic difficulty. But, what exactly can you get from a Temporary Bridging Loan?
The Features of Temporary Bridging Loans
The Temporary Bridging Loan functions much like working capital loans with the long tenure of business term loans. It is a broad-based government-assisted scheme to help keep a business running during the pandemic, with a high loan quantum and low-interest rates.
During its inception, the temporary bridging loan offered a maximum business loan amount of S$ 5 million with a risk share of 90% for the eligible business until 31 March 2021. However, the business loan programme has since been extended from 1 April 2021 to 30 September 2021.
Maximum Loan Quantum. During the extended period, the maximum amount available is at S$ 3 million.
Maximum Repayment Period. A business can repay the loan for up to 5 years.
Maximum Interest Rate. A business can get the loan with the interest rate capped at 5% p.a.
Risk Share. The risk share is at 70%, meaning the government itself becomes somewhat of a guarantor for a percentage of the loan the business takes.
(The borrowing business is still responsible for repaying 100% of the amount. When defaults occur, the Participating Financial Institutions (PFIs) are obligated to follow their standard commercial recovery procedure before making a claim against Enterprise Singapore for 70% of the unrecovered amount.)
What Can the Temporary Bridging Loan Programme Be Used for?
Much like working capital loans, the Temporary Bridging Loan is meant to be used for short-term expenses. It might have a long tenure, but it’s not a business term loan.
Emergencies are unavoidable, and sometimes a business might not have funds to remedy them. The temporary bridging loan allows businesses to address emergency expenses like equipment repairs and replacements.
Businesses can use the temporary bridging loan to mitigate cash-flow issues while waiting for long-term financing. Businesses can also use it on short-term business expenses like rent, employee salaries, utilities, and the like.
The TBLP is useful for company expansion, such as relocation, new equipment and the like. Any enterprise will find this useful, especially a new business.
Application for the Temporary Bridging Loan Programme
TBLP is a government project in collaboration with different banks and financial institutions. The business loan application may vary with different credit criteria and risk assessment methods.
You may visit each bank’s website for more details.
Which are the participating financial institutions?
- CIMB Bank Berhad
- DBS Bank
- ETHOZ Capital
- FS Capital
- Goldbell Financial Services
- Hong Kong and Shanghai Banking Corporation
- Hong Leong Finance
- IFS Capital
- Innoven Capital
- Maybank Singapore and Malayan Banking Berhad, Singapore Branch
- ORIX Leasing
- OCBC Bank
- Resona Merchant Bank
- RHB Bank Berhad
- Sing Investments & Finance
- Standard Chartered
- UOB Bank
- Validus Investment Holdings
What are the eligibility criteria and requirements for a loan application?
The common eligibility requirement is that the business registered and physically present in Singapore, and at least 30% of the shareholders must be permanent residents of the country.
To apply for the TBLP, you must submit the completed Enterprise Financing Scheme (EFS) e-form that needs to include some information regarding your business, as well as some particular supporting documents.
Some required details include:
- Company information, including paid-up capital and percentages of revenue derived from the production of goods or services
- Details of shareholders of your business entity and all corporate parents
- Past financial performance and financial projections
- Details on the required loan, including the amount of financing required
For supporting documents, you may need to include:
- Latest ACRA search of your business entity
- Latest ACRA search of corporate shareholders (if the shareholder(s) hold more than 50%)
- Latest 1-year financing statements
- Asset invoice (if any)
- Any other documents specified by the financial institution
Deferment Of Principal Repayment
To help reduce monthly cash outflow, businesses can request to defer their principal repayment for up to 1 year, subject to the assessment of the participating financial institution.
How is the Temporary Bridging Loan Programme (TBPL) different from SME Working Capital Loan (WCL)?
The Singapore government announced both programmes under the Solidarity Budget to help businesses cope with the effects of COVID-19.
The biggest difference is mainly that TBLP was expanded to cover any business type, while WCL is limited to SMEs. More so, WCL has a limited loan quantum, with only 17 participating financial institutions. Credit criteria and interest rate will also depend on the chosen bank.
Because of Government risk-sharing, is there a bank that does not require a Personal Guarantee?
Unfortunately, all banks and financial institutions will require a personal guarantee (PG), as this signals the commitment by a guarantor to fulfil loan obligations. A PG must state commitment to fulfil up to the full financing amount offered.
The Bottom Line
As it stands, the Temporary Bridging Loan Programme is the best business loan option for any company experiencing difficulty during the pandemic. It has a remarkably low-interest rate, a high loan quantum, and a flexible tenure of up to five years.
Moreover, risk-sharing with the Singapore government helps reduce loaner risk and increases your chance of approval.
But on the off chance that you do not qualify for the programme and are in desperate need of funds in your business account, you can consult with us at Instant Loan.
We are a loan comparison service dedicated to finding the best solution to alleviate the financial needs of your business from a curated selection of the top-rated financial institutions in Singapore.