| |
SINGAPORE: The government is giving an additional S$2.3 billion in loans to help local companies gain access to credit during the current economic slowdown.
Some 124,000 local firms are expected to benefit from various enhanced schemes when they take effect on December 1.
Benny Phua is in a business that makes machines for the textile industry. He has many international clients. He believes one of the enhancements, the Loan Insurance Scheme (LIS), will be handy for his company if the economy gets worse.
All companies can now apply for the scheme. Previously, only smaller companies could qualify if their group turnover was below a certain amount, which varied between listed and non-listed companies.
Phua, managing director of United Texmac and president of Textile & Fashion Federation, said: "It'll bring confidence to the market, especially for us in the textile industry. The LIS will help us to better support our cash flow."
Right now, the company has not experienced any bad debts yet. But it is expecting its revenue to drop by about 10 per cent next year.
The company added that the latest government financing schemes are timely lifelines, which will help small and medium-sized enterprises like them tread along during this difficult period.
Among other measures announced is a new Bridging Loan Programme that gives companies credit of up to S$500,000 for working capital.
Small and medium-sized companies will continue to get loans under the Local Enterprise Financing scheme and the government will increase its loan default risk sharing from 50 to 80 per cent. This is to ensure the financial institutions continue to lend to the small businesses.
Small businesses with fewer than 10 employees can now borrow up to S$100,000, double the amount before. For start-ups, the government is raising the investment cap from the current S$300,000 to S$1 million under the Start-up Enterprise Development Scheme.
It will also temporarily increase the co-match ratio from the existing 1:1 ratio to 2:1 instead. This means that start-ups will receive S$2 from the government for every one dollar an investor puts into the new firm.
And for companies expanding overseas, the government will widen the Internationalisation Finance Scheme. Under the scheme, companies can, for example, get financing to fund the expenses of secured projects overseas.
The turnover cap will be raised to S$300 million for non-trading companies and listed trading companies. This will help to increase the number of companies that qualify for the scheme.
Senior Minister of State for Trade and Industry, S Iswaran, said: "Our experience with the schemes has been quite good. The loan default rates have been quite low and in fact the actual loan loss that's been taken is in fact less than one per cent.
"So I think we're fairly confident that going forward in a tougher economic environment, you might expect the default rates to rise, but again our reference point is in the last downturn and what we've seen in that gives us a lot of confidence that this will be done in a very disciplined way."
Some firms though were hoping for more measures to generate immediate cash flow. But the government said it is best to take a measured approach now. - CNA/vm
|
