Covid-19: MAS and financial industry extend loan repayment support for SMEs and individuals, ESG extends grants and financial support measures

27 October 2020

The Monetary Authority of Singapore (“MAS”), the Association of Banks in Singapore (ABS) and the Finance Houses Association of Singapore (FHAS) announced on 5 October 2020 an extension of support measures to help small and medium enterprises (“SMEs”) and individuals facing cashflow difficulties transition gradually to full loan repayments. The extended measures, which will progressively expire over 2021, are made as MAS and the financial industry recognise that many individuals and businesses will continue to experience cashflow pressures into early 2021. With the extended measures, individuals and businesses currently under loan repayment deferrals will have more time to resume repayments. The support measures will also be available to borrowers previously not under any payment deferral, but who are now facing cashflow challenges.

Since April 2020, banks and finance companies have been providing payment deferrals for SMEs and individuals facing short term challenges in servicing their loan instalments due to the Covid-19 pandemic. The various relief measures are set to expire by 31 December 2020.

Enterprise Singapore (“ESG”) has also announced it is extending or enhancing several grant and financial support measures to help businesses emerge stronger post Covid-19.

Partial deferment of principal payments and restructuring options for SMEs

The following measures have been announced for SMEs:

• Partial deferment of principal payments on secured SME loans and ESG loans: Under the Extended Support Scheme - Standardised (“ESS-S”), SMEs in Tier 1 and 2 sectors, as determined under the Job Support Scheme (“JSS”), may opt to defer 80% of principal payments on their secured loans granted by banks or finance companies, as well as loans granted under the ESG Enhanced Working Capital Loan Scheme and Temporary Bridging Loan Programme till 30 June 2021. SMEs in other sectors may opt to do the same up to 31 March 2021. Under the JSS, Tier 1 and 2 sectors include aviation and aerospace, tourism, hospitality, conventions and exhibitions, built environment, licensed food shops and food stalls (including hawker stalls), qualifying retail outlets, arts and entertainment, land transport, and marine and offshore. This relief will be available to all SMEs that are in good standing with their banks and finance companies, i.e. not more than 30 days past due on all their loan payments. SMEs whose loans have been granted principal moratorium should also not have overdue interest payments for these loans.
• Customised restructuring programmes: SME borrowers for whom the ESS-S is not suitable may consider the Extended Support Scheme - Customised (“ESS-C”), which is being developed to facilitate the restructuring of a borrower’s loans across multiple financial institutions to allow for better restructuring outcomes. The ESS-C complements other restructuring assistance schemes under the Simplified Insolvency Programme (“SIP”) for micro and small companies (to be provided for in the Insolvency, Restructuring and Dissolution Act 2018) and the Credit Counselling Singapore’s scheme for sole proprietors and partnerships (“SPP scheme”). The ESS-C will be available for SMEs with more than one lender for whom the SIP and SPP scheme may not be suitable. Such SMEs may approach one of their lenders to assess if they would benefit from a multi-lender restructuring under the ESS-C.

Borrowers can apply for both the ESS-S and ESS-C from 2 November 2020 onwards.

Help with loan commitments for individuals

The following measures have been announced for individuals:

• Reduced instalment plans for property loans: Individuals with residential, commercial and industrial property loans who are unable to resume making full loan repayments may apply to their bank or finance company to make reduced instalment payments pegged at 60% of their monthly instalment, for a period of up to nine months. Applicants must be able to provide proof of income impact of at least 25%, with property loan payments that are not more than 90 days past due, regardless of whether they have taken up payment reliefs previously. Individuals who meet these criteria can apply for assistance from 9 November 2020 till 30 June 2021.
• Extend loan tenure for renovation and student loans: Individuals with renovation and student loans may apply to their respective bank to extend their loan tenures by up to three years. Applicants must be able to provide proof of income impact and their renovation or student loan payments must not be more than 90 days past due, regardless of whether they have taken up payment reliefs previously. Individuals who meet these criteria can apply for assistance from 9 November 2020 till 30 June 2021.
• Assistance for personal unsecured credit and debt consolidation plan: Individuals with difficulties repaying their unsecured revolving credit facilities, who can provide proof of income impact of at least 25% and with repayments that are between 30 and 90 days past due, may apply to their lender till 30 June 2021 to convert their outstanding balances to term loans at a reduced interest rate. Individuals on Debt Consolidation Plans (“DCP”) who can provide proof of income impact and with repayments that are between 30 and 90 days past due, may apply to their lender till 30 June 2021 to extend the loan tenure of their DCPs for up to five years.

Extension and enhancement to ESG grants and financial support measures

ESG is extending and enhancing the following grant schemes to help businesses seeking to tap new sources of growth through internationalisation, digitalisation and other transformation efforts:

• Market Readiness Assistance Grant (MRA): There will be an increase in the funding support level from up to 70% to up to 80% from 1 November 2020 to 30 September 2021. Support levels will revert to 70% thereafter. From 1 November 2020, the scope of the grant will be expanded to include support for participation in virtual trade fairs to encourage and enable companies to find new business opportunities overseas through such virtual platforms, without physical travel.
• Enterprise Development Grant (“EDG”): The enhanced EDG funding support level of up to 80% will be extended from 1 January 2021 to 30 September 2021. Support levels will revert to up to 70% thereafter.
• Productivity Solutions Grant (“PSG”): The enhanced PSG support level of up to 80% will be extended from 1 January 2021 to 30 September 2021.

ESG is also extending and calibrating the following ESG financial support measures to ensure enterprises can continue to access financing for their cashflow, trade activities and project needs:

• Temporary Bridging Loan Programme (“TBLP”): The TBLP will be extended from 1 April 2021 to 30 September 2021. This is supported by the concurrent extension of the MAS SGD Facility for ESG Loans. Under the extension, the Government’s risk-share on the loan will be lowered to 70% (90% currently), with the maximum loan quantum lowered to S$3 million (S$5 million currently).
• Enterprise Financing Scheme - Trade Loan (“EFS-TL”): The EFS-TL will be extended from 1 April 2021 to 30 September 2021. Under the extension, the Government’s risk-share on the loan will be lowered to 70% (90% currently). The maximum loan quantum will remain at S$10 million. Further, the Loan Insurance Scheme will be streamlined into the EFS-TL programme form 1 April 2021.
• Enterprise Financing Scheme - Project Loan (“EFS-PL”): The EFS-PL will be enhanced to extend support to construction companies to finance the fulfilment of secured domestic projects, from 1 January 2021 to 31 March 2022.

Reference materials

The following materials are available on the MAS website www.mas.gov.sg and ESG website www.enterprisesg.gov.sg:

• MAS media release: MAS and financial industry extend support for individuals and SMEs who need more time to resume loan repayments  
• Annex A - Transition measures offered by banks and finance companies for individuals 
• Annex B - Transition measures offered by banks and finance companies for SMEs 
• MAS infographic on support measures for individuals and SMEs
• ESG factsheet: Grant and financial support measures for enterprises extended to support business recovery
• MAS media release: MAS extends facility to support lending by banks and finance companies to SMEs

Further information

Allen & Gledhill has a Covid-19 Resource Centre on our website www.allenandgledhill.com that contains knowhow and materials on legal and regulatory aspects of the Covid-19 crisis.

In addition, we have a cross-disciplinary Covid-19 Legal Task Force consisting of Partners across various practice areas to provide rapid assistance. Should you have any queries, please do not hesitate to get in touch with us at covid19taskforce@allenandgledhill.com.