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COVID-19: OCBC To Offer S$1B In Gov't-Assisted Loans To SMEs As Applications Spike 10 Times

By the end of June 2020, OCBC Bank expects to lend out S$1 billion in government-assisted SME (small and medium-sized enterprises) loans to help businesses struggling to survive the COVID-19 pandemic.

The S$1 billion loan amount will exceed that of what OCBC Bank had lent to small businesses during the 2008-9 global financial crisis.

Many of these businesses applying for support are from the manufacturing, construction, trading and distribution, and services sectors.

The volume of applications for relief measures in the last two months has increased by more than 10 times as the financial strain has been exacerbated by the ‘circuit breaker’.

OCBC Bank will be fully utilising the support given by the Monetary Authority of Singapore (MAS) under its low-cost SGD Facility. One in two small businesses in Singapore has a relationship with OCBC Bank.

The cost savings from the lower interest rate extended by the Facility will be completely passed on to the customers by decreasing the interest rate of the government-assisted Temporary Bridging Loan to between 2 and 3 per cent.

The waiver of the Bank’s loan processing fees is expected to further contribute to cost savings.

Helping SMEs Ease Cashflow

With loan approval of two days and quick disbursement of the funds into the pockets of the small businesses within a week, OCBC Bank seeks to help SMEs address their pressing cashflow needs speedily.

“Our approach thus far has been to proactively seek out the small businesses who may be vulnerable from this deepening economic crisis and to extend our help as quickly as possible to address their pressing financial needs,” said Linus Goh, Head of Global Commercial Banking, OCBC Bank.

Lena Teng, Director of E Capital Limousine Services Pte Ltd, agreed. “In mid-February, when COVID-19 started becoming more widespread and travel showed signs of decline, OCBC got in touch to discuss the kind of support that they could provide.”

Lee Tuck Keong of Nam Soon Timber Pte Ltd received a temporary bridging loan from OCBC Bank. According to him, the loan application process was very convenient, and the loan approval was given quickly.

“OCBC has been in touch with me since early February to understand the difficulties posed by COVID-19 on my business. When the relief measures were announced in March, after some discussions, I decided to apply for the Temporary Bridging Loan, and received the approval in less than a week. There is a lot of uncertainty ahead so the loan is a useful buffer for my business, and it can be used to support existing projects. We also intend to use the funds to make bulk purchases which will allow us to enjoy economies of scale,” said Tuck Keong, Nam Soon Timber Pte Ltd’s founder.

The number of small businesses which have asked for deferment of principal payments on unsecured and secured SME loans is almost hitting 1,000.

OCBC Bank has seen a similar surge in requests for funding relief from larger SMEs with turnover above S$20 million. The amount to this segment of SMEs has also exceeded the support given during the last Global Financial Crisis.

Featured Image Credit: eFinancial Careers

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