Singapore Scales Back Financing Support for Businesses

The Singapore government has scaled back its financing schemes under the Special Risk-Sharing Initiative (SRI) for businesses starting February 1.

 

The SRI was introduced in December 2008 to help companies cope with the downturn. The schemes have catalysed nearly 26,000 loans worth about $9.2 billion, benefitting more than 14,000 companies.

 

The financing support for the Bridging Loan Programme was withdrawn on February 1 while other schemes have been revised.

 

The Loan Insurance Scheme Plus (LIS+) and the Export Coverage Scheme (ECS), which were introduced as part of the SRI, will continue as part of IE Singapore’s mainstay schemes, but with scaled down parameters.

 

The maximum loan quantum for Loan Insurance Scheme Plus (LIS+) will be reduced from S$15 million to S$5 million. Under ECS, where IE Singapore works with other commercial underwriters to give companies more access to additional trade credit insurance coverage, the government top-up arrangement will however be retracted. The ECS will be renamed as the Trade Credit Insurance Scheme, to reflect its scope more accurately.

 

For the Local Enterprise Finance Scheme (LEFS) and the Micro Loan Programme (MLP), the government’s share of lending risk will revert from 70% to the pre-crisis level of 50%. Similarly, for the Internationalisation Finance Scheme (IFS), the government’s share of default risk will be reduced from 80% to the pre-crisis level of 70%.

 

The insurance premium subsidy under the Loan Insurance Scheme (LIS) will revert from 70% to the pre-crisis level of 50%.

 

The interest rates for the LEFS and MLP will remain for the time being, pending a review.

 

Continued Support for SMEs

 

To ensure that small enterprises have sufficient working capital to expand their businesses, the maximum loan quantum for the MLP will be retained at S$100,000. The pre-crisis quantum was S$50,000.

 

Similarly, the eligibility criteria for LIS, LIS+ and IFS will be expanded to include all trading companies with turnover of less than S$500 million and non trading companies with turnover of less than S$300 million. This will ensure continued access of the loans for mid-sized companies as well.

 


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