8 Common Questions SMEs Have About The Temporary Bridging Loan Programme (TBLP) 2020

Are you looking for a business loan to ease your company’s cash flow during this Covid-19 pandemic? 

One of the key support for Small and Medium-sized Enterprises (SMEs) that was announced in the Solidarity Budget this year is business financing, in particular, the Temporary Bridging Loan Programme (TBLP). This will help SMEs in all sectors to have access to working capital to tide them through this unprecedented crisis.

The Singapore Government has enhanced financing support for SMEs by increasing its risk-sharing to 90% for Enterprise Financing Scheme (EFS) - TBLP for loans initiated from 8th April 2020 to 31st March 2021.

SMEs are eligible to apply for the TBLP as long as they are registered and operating in Singapore, and have at least 30% local equity held by Singaporean(s) and/or Singapore Permanent Resident(s).

Having been advising SME owners on their TBLP applications over the past few months, we have compiled a list of commonly asked questions about securing loans in this uncertain economic environment. Here are the top eight most frequently asked questions:

1. What is the difference between the TBLP and Enhanced Working Capital Loan (WCL)?

TBLP was introduced in response to the COVID-19 outbreak, to help enterprises manage their immediate cash flow needs. Eligible enterprises can borrow up to S$5 million, with interest rate capped at 5% per annum. 

SMEs that require help beyond the TBLP, i.e companies looking for more than S$5 million, can also tap on the Enhanced WCL=, which has been further enhanced to support loans of up to S$1 million. However, interest rates for enhanced WCL are not subject to a cap.

Interest rates for these government-assisted loans have been reduced by half, or more than half, to as low as 2% per annum Effective Interest Rate (EIR) for some businesses. However, credit criteria and interest rates differ across the participating banks and financial institutions.

2. How long is the approval process for TBLP application?

Queue may be longer during this period due to the surge in business loan applications over the past few months. The total amount of business loans disbursed, under government-assisted financing schemes, since March to mid-June 2020 has reached S$7.1 billion, which is five times more than the credit extended in the whole of 2019.

The processing time taken differs for different banks and financial institutions, due to the complexity of business loans requirements and assessment. The time taken for the funds disbursement (after the loan is approved) also differs, with some banks taking up to six weeks while some others only one or two weeks. 

3. What if my business is a new startup and less than one year old? Can I still apply?
   Yes, if your company is incorporated for less than two years, banks like DBS and OCBC are still able to provide the TBLP to you, but subject to banks’ assessment.

4. If my company already has a TBLP approved with one bank, can I still apply for the TBLP with another bank?

Yes, the total aggregate amount borrowed from different banks is capped at the maximum amount of S$5 million under the TBLP.

This means that if Bank A has approved a loan of S$2 million for your company under the TBLP, you can still apply for another S$3 million from another bank, or other banks.

5. Why do banks require a 100% Personal Guarantee (PG) when the government covers 90% of the loan amount?

All banks require a PG for unsecured loans in Singapore. It is not only a means of security but signals a commitment by the guarantor(s) that they are committed to the loan obligation.

The borrower and guarantors are responsible to repay 100% of the loan amount. When defaults occur, banks will follow their standard commercial recovery procedure, including the realization of security, before they can make a claim against Enterprise Singapore for the unrecovered amount in proportion to risk-share. 

6. What should I do if my TBLP application is not approved even though my company is eligible?

The TBLP approval is subject to the assessment of participating banks and financial institutions based on their lending criteria.

SMEs which require further support may approach Enterprise Singapore at +65 6898 1800 or enquiry@enterprisesg.gov.sg for assistance.

Alternatively, you can approach our friendly staff at Smart Towkay if you have any query for your TBLP application.

7. If my company is not profitable in 2019, can I still apply for TBLP?

A company’s profitability is one of the key criteria that banks look at when assessing a loan application. If a company is continuously making a loss for 2 years, it will affect the application approval. Nonetheless, some financial institutions' credit assessment are based on bank statement analysis thus there are still chances of approval.

For minimum turnover requirements, banks like UOB and SCB will only offer loans for SMEs that have minimum S$750,000 turnover, while others like DBS and OCBC can accept lesser turnover. However, please note that this is not a one size fit all approach as we do encounter SMEs that get approval from UOB even when they do not hit the minimum turnover requirement.

8. If my company cannot qualify for the TBLP, should I seek a short term loan elsewhere? 

Unfortunately, we have seen many SMEs who do not qualify for the TBLP due to their lack of eligibility to meet the stringent lending criteria of various participating banks and financial institutions.

With so much uncertainties pertaining to the Covid-19 pandemic, SMEs are not just looking at making profits right now, but the key point is to have adequate cash flow now in order to survive. 

SMEs that do not qualify for the TBLP may want to consider alternative funding options such as Peer-to-Peer (P2P) Lending, also known as Crowdfunding platforms, which pools funds from individual investors and connects them to borrowers through their online platforms. P2P lenders also provide a much faster approval and funding process compared to traditional banks.

However, do note that interest rates for P2P fundings are usually much higher than that of a traditional bank loan, which can start from 1% up to 5% or even higher per month.

Whether you are seeking business financing to ease your company’s cash flow or for a business expansion during this period, the TBLP is definitely the cheapest source of funding right now. If you have met any other difficulties while applying for the TBLP, do let us know as there may be ways Smart Towkay may be able to assist you.

You can also check out our SME business loan comparison calculator and find out more details under respective banks’ tab.

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