Up, up and away: The TBLP or EFS-WCL may be just what you need to jumpstart your company’s growth. Photo credit: Unsplash
Although the pandemic has caused massive disruption to our lives, there is a silver lining behind it – the government-assisted SME loans conceived to help business owners tide over these rough times.
Let’s take a look at two of such SME loans that are more frequently mentioned when it comes to SME financing: the Temporary Bridging Loan Programme and the SME Working Capital Loan.
The TBLP offers SMEs access to working capital for business needs. It was implemented last year during the pandemic as part of the Solidarity Budget.
The bridging loan was supposed to have ended on 31st March 2021. But last October, it was extended for another six months from 1st April 2021 to 30th Sept 2021 with new parameters – the maximum loan quantum is now S$3 million, with the government risk-share percentage at 70%.
Up until 31st March 2021, the maximum loan quantum was S$5 million, while the government risk-share percentage was at 90%.
In July 2021, the bridging loan was again extended from 1st October 2021 to 31st March 2022 – with the same parameters as of 1st April 2021.
Update: With the announcement of Budget 2022 on 18th February 2022, the TBLP has been extended to 30th September 2022 with revised terms.
Here is what the TBLP offers:
Maximum loan quantum: S$3 million per borrower. Borrowers are also subject to an overall borrower group limit of S$20 million.
Maximum repayment period: 5 years
ESG risk-share: 70%
Interest rate: Capped at 5% p.a.
Eligibility: Your company needs to be a business entity that is registered and physically present in Singapore. Sole proprietorships, partnerships, limited liability partnerships and companies registered with ACRA are eligible to apply for the TBLP.
You also must have at least 30% local equity held directly or indirectly by Singaporean(s) and/or Singapore permanent residents (PRs), determined by the ultimate individual ownership.
Approval of the bridging loan is subject to assessment by the respective participating financial institution (PFI).
Where to apply: At PFIs such as CIMB Bank Berhad, Maybank, OCBC Bank, Standard Chartered Bank, HSBC, DBS Bank, United Overseas Bank, Resona Merchant Bank Asia Ltd, RHB Bank Berhad, Bank of China, IFS Capital Limited, Hong Leong Finance, Sing Investments & Finance Ltd, Singapura Finance, ORIX Leasing, Goldbell Financial Services, ETHOZ Capital Ltd, FS Capital Pte Ltd, and Validus Investment Holdings Pte Ltd.
The maximum loan quantum for this bridging loan is quite high – up to S$3 million per borrower – assuming all conditions and credit criteria of the PFI are met.
This is definitely excellent news for SME owners – even if the maximum loan quantum and government risk-share percentage are now both lower than before.
Borrowers are also subject to an overall borrower group limit of S$20 million for the TBLP.
The term “borrower group” refers to i) the borrower; ii) corporate shareholders holding more than 50% shareholdings at all levels up; iii) subsidiaries where the applicant company holds more than 50% shareholding and subsequent subsidiaries at all levels down; and iv) subsidiaries where the applicant’s ultimate parent company holds more than 50% shareholdings and its subsidiaries at all levels down.
Whether you are borrowing as an individual or a group, it is important to note that even with government risk-sharing in place, you are still required to repay 100% of the loan amount you borrowed for the bridging loan.
If and when defaults occur, PFIs will follow their standard commercial recovery procedures, including the realization of security from you and your guarantor(s), before they can make a claim against Enterprise Singapore for the unrecovered amount in proportion to the risk-share.
Read the frequently asked questions here.
This working capital loan is one of the loans offered under Enterprise Singapore’s Enterprise Financing Scheme (EFS).
This umbrella scheme was formed on 29th October 2019 to streamline the various financing schemes available under Enterprise Singapore.
The EFS now comprises seven types of schemes that address the financing needs of enterprises. The other six schemes include EFS Green, SME Fixed Assets Loan, Venture Debt Loan, Trade Loan, Project Loan, and Mergers & Acquisitions Loan.
The SME Working Capital Loan (EFS-WCL) is often used by SME owners to finance operational cashflow needs. The term “SME” in EFS-WCL refers to a company with a group revenue of up to S$100 million or a maximum of 200 employees.
This is what the EFS-WCL offers:
Maximum loan quantum: S$300,000 per borrower. Borrowers are subject to an overall borrower group limit of S$5 million for EFS-WCL. In addition, there is an overall loan exposure limit of S$50 million per borrower group across all facilities.
Maximum repayment period: 5 years
ESG risk-share: 50%. Young enterprises (i.e. companies formed within the past 5 years with at least 1 employee, and more than 50% equity owned by an individual) may receive a risk-share of 70%.
Interest rate: Subject to the PFIs’ assessment of risks involved.
Eligibility: Your company needs to be a business entity that is registered and physically present in Singapore. Sole proprietorships, partnerships, limited liability partnerships and companies registered with ACRA are eligible to apply for the working capital loan.
You also must have at least 30% local equity held directly or indirectly by Singaporean(s) and/or Singapore PRs, determined by the ultimate individual ownership. Your group annual turnover must not be more than S$500 million.
Approval of the working capital loan is subject to assessment by the respective PFI.
Where to apply: At PFIs such as CIMB Bank Berhad, Maybank, OCBC Bank, Standard Chartered Bank, HSBC, DBS Bank, United Overseas Bank, Resona Merchant Bank Asia Ltd, RHB Bank Berhad, IFS Capital Limited, Hong Leong Finance, Sing Investments & Finance Ltd, Singapura Finance, ORIX Leasing, ETHOZ Capital Ltd, FS Capital Pte Ltd, and Validus Investment Holdings Pte Ltd.
How to apply: See the PFIs’ contact details and find out how to apply here.
With a maximum loan quantum of S$300,000 per borrower and a risk-share between 50% to 70%, this is a viable option for SME owners who need a loan, even if the maximum loan quantum is lower than that of TBLP.
There is also an overall borrower group limit of S$5 million for EFS-WCL, as well as an overall loan exposure limit of S$50 million per borrower group across all facilities.
As it is with the bridging loan, you are required to repay 100% of the loan amount, although Enterprise Singapore will share the loan default risk with the PFIs in accordance with the risk-share percentage should you or your guarantor(s) be unable to make repayment.
However, companies and company directors with good credit ratings and limited liabilities will stand a higher chance of getting their EFS-WCL application approved. Your credit behaviour and history will have a bearing on the interest rate of the loan, which is subject to the PFIs’ assessment of risks involved.
Read the frequently asked questions here.
Whether you are thinking of applying for a bridging loan or working capital loan, it would be best to act quickly.
Now that the TBLP has been extended to 30th September 2022 – and no one knows if it will be extended again, since the government has stated upfront that such support may taper off slowly as the economy recovers gradually, now would be a good time for you to apply for it.
The terms for the bridging loan are more fixed – a loan tenor of five years and no more than 5% interest per annum. In addition, the risk-share percentage is higher – not to mention the maximum loan quantum of S$3 million per borrower.
In comparison, the working capital loan’s maximum loan quantum and risk-share percentage is much lower at S$300,000 per borrower and 50% respectively, as well as an interest rate that will be determined by the PFI in question. That said, the loan tenor is thankfully still five years.
But the one bright spot of the EFS-WCL is that it has made a concession for young enterprises – allowing them to get 70% risk-share if their applications are successful. This is great news for promising outfits that are struggling against the economic headwinds and overall uncertainty plaguing the business climate.
That said, it is crucial to plan carefully and ensure that you can make repayment every month so as to avoid defaulting on the loan.
Another piece of good news is that the pool of PFIs for both the bridging loan and working capital loan is pretty wide – so you may still have a chance of getting your loan application approved.
Or click here to see all the EFS loans that the PFIs are offering.
Good luck!
Leading digital loan marketplace Lendingpot connects SMEs to its network of 45 lenders comprising relationship managers from banks, financial institutions, and private and peer-to-peer lenders in Singapore for free. It aims to help SMEs overcome the information asymmetry problem and lack of transparency prevalent in the SME financing sector by offering SMEs financing options such as business term loans, property loans, revenue-based financing, credit lines, working capital loans, bridging loans, invoice financing, and more.
Belinda loves thinking about random stuff, and collecting useless bits of facts and trivia. She often roots for the underdog, and believes the world needs more happy endings.
