[The Temporary Bridging Loan Programme (TBLP) ended in September 2022. Consider other options such as the SME Working Capital Loan]
Overview of Temporary Bridging Loan
The Singapore Government has introduced a slew of measures to combat financial challenges caused by COVID-19, these include a series of Government-backed loans / financing to aid business in Singapore. One such scheme is the Temporary Bridging Loan Programme (TBLP). It aims to provide greater access to working capital for a company’s needs at a lower cost.
What Is The Temporary Bridging Loan Programme?
The TBLP is a government-assisted financial scheme to provide loans to SMEs to help during the COVID crisis. Any company from any sector can apply to the scheme to fund their business needs. The scheme has been gaining popularity in recent weeks with the business community because of its attractive features. The program was launched in March 2020 and it extended until September 2022.
What is the Loan Amount, Interest Rate and Repayment Period?
Qualified businesses can borrow up to $1 million over a five-year period with the Temporary Bridging Loan, which has an interest rate limit of 5.5%. Note that the maximum loan quantum has reduced in the extension. When the scheme first started the maximum loan quantum was up to $5 million but now the maximum loan quantum is $1 million. This introduces a loan exposure limit.
The Singaporean government takes part in a 70% risk-sharing scheme for loans to promote lower interest rates and encourage banks to offer them. In the event of default by companies, the risk-share is activated, while they remain responsible for loan repayment and interest. The Government Risk-Share Percentage can vary from 70% to 90%. Note there is a maximum repayment period of 5 years.
Why the Government Risk Sharing Rate makes it easier to get financing under Temporary Bridging Loan Programme?
The main feature of TBLP is the risk share agreement between the financial institutions and the government, under the agreement the government takes 70%-90% of the risk of the loan. This means in case of default, the financial institution will follow the normal recovery process but if it can not recover the total loan amount, the government will pay the remaining 70%-90% of the loan amount.
This 70% risk-share arrangement reduces the risk of lending greatly for financial institutions and thus they are more willing to provide loans under the program. Businesses have already found it easier, quicker, and more hassle-free compared to other loan programs, especially because no collateral is necessary, instead just a personal guarantee is a requisite by most financial institutions.
What Is The Eligibility For A Temporary Bridging Loan Programme?
- Be a business entity that is registered and physically present in Singapore for at least six months. A Sole Proprietorship, Partnership, Limited Liability Partnership, or Company is an example of an entity.
- At least 30% local equity held directly or indirectly by Singapore Citizens (Singaporeans) and/or Singapore Permanent Residents (PRs), determined by the ultimate individual ownership. Entities with Corporate Shareholders can also be eligible as long as they meet this requirement.
In case you are not eligible for the Temporary Bridging Loan Programme, you may want to consider other Financing Schemes such as the SME Working Capital Loan or other Business Loan Options. Business loan application process varies from bank to bank and the business term loan would also be different. They would also be subject to credit assessment and risk assessment.
What Are The Document Requirements for Temporary Bridging Loan and is it different from other Business Loan Application?
- Detals of Directors (including NRIC Copies)
- Details of Shareholders (including NRIC Copies) and Details of Corporate Parents (this is to ensure you meet the eligibility / credit criteria for local equity holding)
- Latest 2 years Notice of Assessment for All Directors/Shareholders
- Company Latest 2 Years Financial Report
- Latest 3-6 Months Company Bank Statements
These are the documents needed to apply for TBLP. Further, supporting documents might also be needed by Banks and Financial Institution based on their business loans requirements.
Requirements for Personal Guarantee for Temporary Bridging Loan
Entrepreneurs should be aware that obtaining a Temporary Bridging Loan for their business may necessitate a full personal guarantee.
Enterprise Singapore (ESG) states that loan guarantees serve as both a security measure and a commitment from the guaranteeing party/parties towards loan obligations. If a default occurs, the bank will follow standard commercial recovery procedures before requesting any outstanding funds from Enterprise Singapore (ESG).
What Are The Pros And Cons Of Temporary Bridging Loan Programme for my Firm?
Pros
- Businesses can get loans at a cheap interest rate with a high loan maximum amount. This is among the lowest rates available to businesses for bank loans and is a good option for low-cost working capital.
- The program can allow borrowers to pay existing loans that had a higher interest rate, therefore reducing expenses and allowing your business to have a higher cash flow.
Cons
- If your company is unable to continue daily business activities even with added cash flow and therefore unable to pay the debt, you as the business owner will be subjecting yourself to possible lawsuits as guarantors.
- The maximum loan quantum is lower now so you have to determine whether that will be sufficient for the needs of your company
Where Can I Apply For Temporary Bridging Loan Programme or the SME Working Capital Loan and other Business Loans?
Below is a list of the Financial Institutions / Lending Institutions where you can apply for a Temporary Bridging Loan Programme:
- Oversea-Chinese Banking Corporation Ltd (OCBC Bank)
- DBS Bank Ltd
- CIMB Bank Berhad
- ETHOZ Capital Ltd
- FS Capital Pte Ltd
- Goldbell Financial Services Pte Ltd
- Hong Kong and Shanghai Banking Corporation
- Hong Leong Finance Ltd
- IFS Capital Ltd
- Innoven Capital
- ORIX Leasing Singapore Ltd
- RHB Bank Berhad
- Singapura Finance Ltd
- Standard Chartered Bank
We hope we provided more clarity on the Temporary Bridging Loan Programme and the requirements of the scheme. Please don’t hesitate to contact us if you have any more questions