Two schemes launched for SMEs that owe debts to multiple lenders

Singapore

SMALL and medium-sized enterprises (SMEs) in financial distress because of the Covid-19 pandemic can now apply for two schemes to restructure their credit facilities and debts owed to multiple lenders.

The Sole Proprietors and Partnerships (SPP) Scheme and Extended Support Scheme - Customised (ESS-C) launched on Sunday are part of a package of extended relief measures announced on Oct 5 by the Monetary Authority of Singapore (MAS), the Association of Banks in Singapore (ABS) and the Finance Houses Association of Singapore.

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.

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 that do not qualify for the SPP Scheme and Simplified Insolvency Programme can apply for the ESS-C. Launched by ABS, it is an industry effort led by UOB and MAS, along with other major banks, to help SMEs with viable businesses restructure their credit facilities across multiple financial institutions (FIs).

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 FIs to apply and be assessed for recommendation under the scheme. 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 Char-tered 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 the ABS website.