Small-enterprise owners saddled with debt get help with new programme
SINGAPORE — Saddled with a mountain of debt of up to S$400,000 owed to banks and other creditors, a 58-year-old director of a marine shipyard subcontractor was sure he had “totally no chance” of reversing his fortunes.
This was after his firm, which builds and repairs ships, has been facing the prospect of going under since 2016 due to fewer contracts, delayed payments from its main contractor, and rising labour costs.
On an accountant’s advice, he sought help early this year from non-profit organisation Credit Counselling Singapore (CCS).
It proved to be a sound decision. CCS not only helped him to come up with a repayment plan, but its officers also helped negotiate with banks for lower interest rates on the loans his firm is repaying.
Now, he is on a plan to pay off about S$140,000 owed to banks for loans and overdrafts for credit cards. He pays monthly instalments of about S$2,000, and will clear his debt in seven years.
Without the help, he would have had to fork out monthly interest of S$3,000 to S$4,000.
He told TODAY that it has “not been easy” as business continues to be slow, but he would be “in a very sorry state” if not for CCS’ help.
“If they don’t help us, in seven years’ time, I’ll still be paying off the loan,” he said.
The company director, who did not want to be named, is one of 351 small-enterprise owners CCS has been helping between June last year and September this year. More than half of this group have personal debts of more than S$100,000.
On Thursday (Oct 25), CCS, which has been counselling individuals in debt since 2004, announced that it is extending its services formally to small-enterprise owners.
It is testing its Enterprise Credit Counselling Programme to help entrepreneurs who are saddled with debts after their businesses closed, or are on the verge of discontinuing operations.
This includes helping these owners manage their liabilities by taking a “comprehensive and coordinated approach” for those able to repay within a reasonable period, and drawing up a repayment proposal.
The repayment proposal will take into account their ability to settle outstanding loans within a reasonable period, and will be subject to approval from creditors, CCS said.
To qualify, these small-business owners must have business assets of up to S$1 million, and total business debts of no more than S$500,000.
A group talk will first provide information on topics such as personal guarantees, and those who still need help after that will be counselled according to their needs, such as how to ascertain their liabilities and manage debts.
CCS' chairman Kuo How Nam said that the non-profit organisation is not trying to save enterprises in trouble because it does not have the resources or expertise to broker a deal with various stakeholders. “However, we can try to minimise the impact of a business failure on entrepreneurs,” he said.
He told TODAY that while there are many government schemes to help businesses innovate and improve productivity, among other things, “there are no programmes to help people when they are in trouble”.
“While there are so many resources to help people, when they fail, they are basically left on their own,” he noted, adding that the programme attempts to bridge that gap.
The company director who received help from CCS said that he benefited from its advice on how to control spending and to prioritise payments.
He advised companies in debt, but which still have a source of income, to approach CCS for help.
“Sometimes, we take it for granted that we have enough every month... and I never thought that one day, I would lose my source of income and get into trouble,” he said.
After all his financial woes, CCS’ help taught him to “save for a rainy day”, the company director added.
