Two debt restructuring schemes launched to help distressed SMEs

FROM Monday, small and medium-sized enterprises (SMEs) in financial distress because of the Covid-19 pandemic will be able to access the Sole Proprietors and Partnerships (SPP) Scheme and Extended Support Scheme - Customised (ESS-C) to restructure credit facilities and debts owed to multiple lenders.

The two schemes, both launched on Sunday, are part of a package of extended relief measures announced by the Monetary Authority of Singapore (MAS), the Association of Banks in Singapore (ABS) and the Finance Houses Association of Singapore on Oct 5.

The SPP Scheme by ABS and the Ministry of Law is for sole proprietors and partnerships that are having difficulty servicing their loans but are likely to recover if they are given time and concessions for their loan repayments.

Debt restructuring charity Credit Counselling Singapore (CCS) will help the SPPs restructure their unsecured business debts owed to participating lenders under the scheme. Monthly instalment payments will be lowered by extending the loan repayment period to up to a maximum of eight years. Interest rates will be based on the individual loan's original contractual terms, subject to a maximum of 7 per cent per annum.

To qualify, the SPP must owe unsecured debts to two or more of the participating lenders and the total unsecured debt must not exceed S$1 million. Approval of SPP Scheme applications will be at the discretion of the lenders.

Participating lenders for the SPP Scheme are American Express, CIMB Bank, Citibank, DBS, Diners Club, ETHOZ Capital, Goldbell Financial Services, HL Bank, Hong Leong Finance, HSBC Bank, Maybank, OCBC, RHB Bank, Singapura Finance, Sing Investments & Finance, Standard Chartered Bank and UOB.

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The SPP Scheme is meant to complement a Simplified Insolvency Programme that will help micro and small companies rehabilitate their businesses by restructuring their debts, or wind up if their business has ceased to be viable.

SMEs for whom the SPP Scheme and Simplified Insolvency Programme are not suitable can apply for the ESS-C to restructure their credit facilities across multiple financial institutions. The programme launched by ABS is an industry effort led by UOB and MAS, along with other major banks, for SMEs with viable businesses.

Under this scheme, participating banks and finance companies will coordinate their efforts to restructure an SME's existing credit facilities, which can include loans under Enterprise Singapore's Temporary Bridging Loan Programme and Enhanced Working Capital Loan Scheme.

SMEs can approach any of their lending financial institutions to apply for the programme. Currently, the banks and finance companies that will offer the ESS-C are Bank of China, CIMB Bank, Citibank, DBS, HL Bank, Hong Leong Finance, HSBC Bank, Indian Overseas Bank, Industrial and Commercial Bank of China, Malayan Banking and Maybank Singapore, OCBC, RHB Bank, Sing Investments & Finance, Singapura Finance, Standard Chartered Bank and UOB.

Said ABS director Ong-Ang Ai Boon: "Given the depth of this crisis, the financial industry has come together to adopt a collective approach to help SMEs with viable business models restructure their debt. The intent is to facilitate a more holistic restructuring of an SME's loans compared to if the SME had to approach its lenders individually."

More information on the SPP Scheme will be available from CCS, and information on the ESS-C will be provided on ABS' website.