Singapore banks boost support for micro businesses

Singapore

SINGAPORE banks have ramped up support for micro enterprises with collateral-free loans, they said on Wednesday.

OCBC told The Business Times the bank has to date worked with close to 6,000 micro and small businesses with collateral-free loans totalling over S$1 billion. Linus Goh, OCBC's head of global commercial banking, said half of these were to customers that did not have borrowing facilities with the bank. "In the second half of this year, we have observed some early signs of green shoots in certain industries and businesses, with a growing interest in new loans to support these opportunities."

As for UOB, since March 2020, the bank has disbursed more than S$1.3 billion in collateral-free loans to small and micro businesses to help them stay afloat, said Lawrence Loh, head of group business banking at UOB. Of these companies, one in four are micro businesses with a turnover of less than S$1 million. The bank has also offered pre-approved loans of up to S$200,000 to eligible small businesses since April this year.

DBS has approved close to 10,000 loans to small and medium enterprises (SMEs) in Singapore since the start of March this year. Of these, more than 5,000 loans, totalling some S$800 million, were for micro enterprises, which are defined as companies with less than S$1 million in annual revenues. Most of these loans were also collateral-free, the bank said.

The average loan quantum was just over S$160,000, among micro enterprises that received financing from the bank over the last eight months. DBS said that this quantum is about 60 per cent more than what some digital-lending platforms are offering. Also, as micro enterprises may need speedier working-capital financing options, the bank provided them with an option to avail funding in just one day, with its Digital Business Loan for up to S$200,000 in collateral-free funding.

DBS said it also simplified the credit documentation process to relieve micro enterprises of the onerous task of producing audited financial statements, which are typically required for such loans.

Since March, one in two loans approved for micro enterprises were for customers who had no prior borrowing relationship with DBS. It has banked close to 2,000 new micro enterprises during this period. That brings the total number of micro enterprises banking with DBS to over 40,000.

Such companies typically fly under the radar of lenders and may not be familiar with the support available to them, even though many have viable business models and the potential to grow much bigger, said Joyce Tee, DBS group head of SME banking.

DBS has also offered end-to-end financing and digital transformation help to the hardest-hit industries since March this year. The bank put together a DBS Resilience Package for food and beverage players in as few as three days. A similar package for SMEs in the retail and tourism sectors is in the pipeline, DBS said.