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COVID-19: OCBC to disburse S$1b in government-assisted SME loans to small businesses by June 30
Article originally posted on The Business Times.
OCBC on Monday, 20th April 2020, said it expects the amount of government-assisted loans it lends out to small businesses to hit S$1 billion by June 30, fully utilising the support given by the Monetary Authority of Singapore (MAS) under its low-cost Singapore-dollar facility.
Its expected loan amount of S$1 billion will exceed the total government-assisted loans disbursed to the same customer segment during the 2008-2009 global financial crisis.
Cost savings from MAS' facility will be completely passed on to customers, by bringing the interest rate of the government-assisted temporary bridging loan to 2-3 per cent, said the bank in a statement.
OCBC's rates stood at around 6 per cent at the start of the year. Further cost savings will be derived from the waiver of the bank’s loan processing fees. With a loan approval period of two days and disbursement of funds within a week, the bank said it seeks to quickly address the pressing cash flow needs of small businesses affected by the novel coronavirus outbreak.
OCBC said it registered a spike in the volume of applications for relief measures in the last two months by more than 10 times, as the financial strain arising from the current "circuit breaker" period added to an already challenging situation. The manufacturing, construction, trading and distribution, and services businesses are increasingly turning to the bank for support, it added.
Close to 1,000 small businesses have asked for deferment of principal payments on unsecured and secured SME loans. For the larger SMEs with turnover above S$20 million, the bank has seen a similar surge in requests for funding relief, and the amount to this segment of SMEs has also exceeded the support given during the global financial crisis.
These loans are part of OCBC's virus relief package rolled out to help businesses amid the virus outbreak. The bank said it has digitalised the process and simplified the loan requirements for existing customers. Where hardcopies of documents were required before, electronic copies with digital signatures are now accepted during this circuit breaker period.
OCBC head of global commercial banking Linus Goh said: "In reaching out to our small business customers over the past three months, we have seen how they have had to adapt to cope with the new challenges and have been very responsive to the initiatives to relieve the stress on their operating cash flow from the loan moratoriums as well as the new ESG (Enterprise Singapore) loans.
"We will ensure that no SME with a viable business model hit by Covid-19 is turned away."