A temporary bridging loan is an advantage that allows your business to transition towards much more profitable ventures. In the case of COVID19’s paralysis of Singapore’s current economy, temporary bridging loans greatly help businesses recover from their current issues.
In this light, the Singapore government’s temporary bridging loan programme is the perfect way to springboard businesses without using semi-compatible financing with incompatible or shoehorned terms. Now, businesses have Enterprise SG to share the risk and increase their personal guarantee (PG) in the program.
Whether you’re building a new product line, expanding your market, or wanting a jumpstart to recover from financial difficulties, a temporary bridging loan will provide your business with the necessary resources it needs for its transition.
What is The Temporary Bridging Loan Programme?
As we’ve mentioned earlier, the Temporary Bridging Loan Programme provides businesses with high-quality loans to help them invest in everything that aids their transition to functional operations. The loan uses an enhanced enterprise financing scheme that allows the government to share risks with businesses that have immediate cash flow needs. Here are its specifications:
- Maximum Loan Quantum: S $3million per borrower
- Interest Rate: Capped at 5% per annum.
- Repayment Period: 5 -Years
- Government Risk Sharing: 70% of the loan
Temporary Bridging Loan Programme Participating FIs
Here is a list of all financial institutions affiliated with Enterprise Singapore to provide temporary bridging loans.
- CIMB Bank
- Citibank
- DBS Bank
- Ethoz Capital Ltd
- HSBC
- Hong Leong Finance Ltd
- IFS Capital Ltd
- Maybank Singapore
- ORIX Leasing Singapore Ltd
- OCBC Bank
- Resona Merchant Bank Asia Ltd
- RHB Bank
- Sing Investments and Finance Ltd
- Singapura Finance Ltd
- Standard Chartered bank
- United Overseas Bank
How to Apply For The Temporary Bridging Loan Programme
Here are the criteria to become eligible and pass the requirements for the temporary bridging loan.
Eligibility
- Business entities must be registered and physically present in Singapore and registration in Singapore’s industrial and business listing.
- The company must have at least 30% local equity held by Singaporeans or Singaporean PRs.
Requirements
- Company information, including paid-up capital and percentages of revenue derived from the production of goods or services
- Credit Criteria: Details of shareholders of your business entity and all corporate parents
- Past financial performance and financial projections
- Details about the loan the business needs, including the amount of financing required
- Latest ACRA search of your business entity
- Latest ACRA search of corporate shareholders (if the corporate shareholder(s) hold more than 50% of total shareholding)
- Latest 1-year financing statements
- Asset invoice (if any)
- Any other documents specified by the financial institution
Steps
- Head to Enterprise SG’s TBLP-dedicated page
- Find the contact details of the participating financial institution you intend to work with
- Submit all your requirements to prove your eligibility
- Wait for their decision on your loan application
Keep in mind that all TBLP application results depend on your bank, which means some banks might approve your current business standing while others might reject it for the same reasons.
Alternatives to TBLP
Here are two alternatives to Singapore’s temporary bridging loan programme that can act as support loans with sufficient maximum loan quantum.
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SME Working Capital Loan
SME Working Capital Loan is a loan product offered by most of the finance companies in Singapore. It is a loan that is easy to avail of and can be used for various purposes such as expansion, working capital, or even merger for small and medium-sized enterprises. The financing support product is provided to businesses that have annual sales below S $10 million and are registered in Singapore. Here are more details about the SME WCL.
- Maximum Loan Quantum: S $300,000
- PFIs: 17
- Interest Rate: Depends on PFIs
- Maximum Repayment Period: 5 Years
- Government Risk Sharking: 50-70%
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Business Loan
A business loan is a type of loan that a bank or other lending institution will provide to help a business owner raise funds needed for the start-up, growth, or expansion of a business. Here are more details you’ll want to know about them.
- Maximum Loan Quantum: Depends on your business’ needs and bank’s assessment
- Providers: Licensed moneylenders and Singapore Banks
- Interest Rate: 5-15% for licensed moneylenders, depends on the business loan lending bank.
- Maximum Repayment Period: up to 24 months for licensed moneylenders depending on the agreement, 1-5 Years for most banks
Frequently Asked Questions
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What Is the Difference Between Temporary Bridging Loan Programme and SME Working Capital Loan?
These loans are offered by the government to businesses that require short-term capital but do not have enough liquidity to obtain a line of credit or loan. They offer flexible terms and conditions so they can be tailored to the needs of your company.
Temporary Bridging Loan Programme is a loan offered up to six months, while the SME Working Capital Loan provides short-term capital for up to 12 months.
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Is There a Bank That Does Not Require Personal Guarantee Since the Government Is Providing Risk Sharing?
Participating financial institutions will still require you to provide additional personal guarantees as part of their standard procedure. Your guarantee protects them from any default on your part, which is partly why these institutions offer such large loans in the first place, even if the government is risk-sharing.
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Can My Business Apply for the Temporary Bridging Loan Multiple Times With Different Financial Institutions?
It is possible to apply for TBLP more than once using a different PFI. However, this loan has a maximum of S $5 million per PFI, and there are certain conditions you must meet. For instance, one PFI in the TBLP can approve S $2.5 million for your company with that PFI, and another can give you S $0.5 million more if it fulfills all the conditions.
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What Happens If The Business Doesn’t Qualify For TBLP?
If your company is not eligible for the temporary bridging loan programme, consider approaching alternative financial institutions for their respective bridging loans. Non-participating financial institutions can still help companies stay afloat with bridging loans that are likely much smaller than the ones from larger banks. However, they may have varied eligibility and requirements, including stricter personal guarantees, in order to approve your loan application.
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What Does the 70/90% Risk Share Mean?
The borrower and guarantors are still jointly responsible for paying 100% of the loan amount back. When a business fails to recover an unsecured loan, Enterprise SG is liable to pay back the whole amount taken after the banks and other financial institutions have performed their due diligence.
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Do I Need to Be Physically Present During Application and When I Secure Financing?
Some participating financial institutions might ask you to be physically present upon securing financing. On the other hand, some might inform you of your disbursal schedule but ask you to open a bank account dedicated to your deposit.
Despite your risk assessment, banks may or may not require you to be physically present during application and claiming based on their preference.
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Who Are Eligible SMEs for TBLP?
All businesses that Singapore classifies as small and medium enterprises are eligible for TBLP. As such, multinational companies currently in Singapore aren’t eligible for the loan.
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What Happens When I Fail to Pay for The TBLP?
Your PFI acting as your lender will go through their usual delinquent payer procedures. The PFI will approach Enterprise Singapore to gain back their unrecovered amount from borrowers, leaving Enterprise SG to discuss payment terms with the business.
Glossary of Terms
- Ultimate Individual Ownership: This pertains to someone who owns shares in a company (or has control over the company) also uses these shares to conduct transactions on the business’s behalf.
- Enterprise Financing Scheme SME: Enterprise Singapore’s risk-sharing with businesses to achieve low interest rates and higher rate approval from participating financial institutions. Temporary bridging loans provide a guaranteed 70% risk-sharing.
- Solidarity Budget: The Singapore government’s dedicated budget to aid businesses across Singapore that makes up the amounts they supply in Singapore’s Temporary Bridging Loan Programme and financing scheme SME Working Capital.
To Sum It All Up
- The Temporary Bridging Loan Programme is for Singaporean companies and has a 70-90% risk-sharing with borrowing businesses.
- Businesses directly affected by COVID19’s economic freeze can apply for financing.
- The Temporary Bridging Loan Programme provides a cap of S $3million per head and S $20 million per company in loan amounts.
- You can take out a business loan from banks and licensed moneylenders or use SME Working Capital Loan as an alternative to the Temporary Bridging Loan Programme.
If you need high-quality business loans, you can always count on us at 365 Credit Solutions. We can provide you with a business loan that can elevate your operations to new heights. Request for a quote today!
