MAS extends low-cost funding to banks, finance companies to support SME lending

THE Monetary Authority of Singapore (MAS) will extend its low-cost Singapore-dollar facility for another six months, it said on Monday.

The facility had been slated to end on April 1, 2021, but will now be extended to Sept 30, 2021.

Since April this year, this MAS facility has disbursed S$5.7 billion to eligible financial institutions to support lending by banks and finance companies to small and medium-sized enterprises (SMEs) in the Republic.

The facility offers Singapore-dollar funding at an interest rate of 0.1 per cent per annum for a two-year tenor to eligible financial institutions to support Enterprise Singapore (ESG) loans made under the Temporary Bridging Loan Programme (TBLP) and the Enterprise Financing Scheme (SME Working Capital Loan).

In a statement, the regulator said its latest initiative complements the six-month extension of the TBLP from April 1, 2021 to Sept 30, 2021.

Taken together, the government's risk sharing through the ESG loan schemes and MAS's funding through the facility have helped lower borrowing costs for local enterprises to a range of 1.5 to 3 per cent per annum under the TBLP, down from 6 per cent or more for other unsecured working capital loans.

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Jacqueline Loh, MAS deputy managing director of markets and development, said the Singapore-dollar facility complements the regulator's other liquidity facilities which provide banks with greater certainty of access to central bank liquidity.

"MAS's suite of liquidity facilities will continue to support banks and finance companies in providing credit to individuals and businesses in Singapore and the region, amid the economic headwinds from the Covid-19 pandemic," she added.