First bank to tap MAS SGD Facility to help clients access funds at lower interest rates
United Overseas Bank (UOB) today announced that it has already approved S$4 billion in loans under the Temporary Bridging Loan Programme (TBLP) since the government increased its risk-share of such loans to 90 per cent1 a month ago.
The loans were extended to the Bank’s mid-sized enterprise clients in sectors which have been hard hit by the COVID-19 pandemic including construction, consumer staples2, retail and hospitality. Firms in many sectors have been required to stop activities and have been affected by the drop in overall consumption as people stay home during the “circuit breaker” period.
To help its clients access much-needed funding at lower interest rates, UOB has also tapped the Monetary Authority of Singapore (MAS) SGD Facility for Enterprise Singapore (ESG) Loans (the Facility)3. UOB is the first bank to access the Facility and is passing on the funding cost savings in full to its clients.
Mr Eric Tham, Head of Group Commercial Banking, UOB, said, “As the COVID-19 pandemic continues to affect businesses’ day-to-day operations, many mid-sized firms are finding themselves at a critical juncture. These firms tend to have hundreds of employees and high overhead fixed costs, making it imperative for them to access additional liquidity quickly.
“Since the start of the COVID-19 pandemic, we have been helping SMEs overcome the shock to their business. We have helped our clients overcome their immediate liquidity challenges by providing loan moratoria and allowing them to repay loan interest only. Through our close collaboration with the MAS and ESG, we have helped clients access funding under the government-assisted schemes quickly and at much lower interest rates than before the pandemic. We hope that through the tripartite effort between MAS, ESG and UOB, we will be able to help these companies tide over the pandemic and plan for the eventual return to more normal operating conditions.”
Digital application process to help clients access funding quickly and easily
To ensure that funds can be disbursed as quickly as possible, UOB has also digitalised the entire loan application process for clients to receive their funds in about a week.
Eng Lee Engineering Pte Ltd is one of the clients that UOB has helped to access TBLP funding. Since the start of the COVID-19 pandemic, the construction company has had to manage several challenges, including having to stop operations and to step up its measures to ensure the safety and well-being of their foreign workers residing at dormitories. With expenses continuing to pile up while operations are kept on hold, the firm wanted to secure additional funding to ensure that it has the cash flow needed to manage expenses.
Mr Looi Bock Heay, Managing Director, Eng Lee Engineering Pte Ltd, said, “The COVID-19 pandemic has impacted our business greatly. Not only are all our projects at a standstill, we don’t know when we can resume normal operations. This puts a huge strain on our cash flow. However, with the government’s initiatives and UOB’s proactive and timely support, I secured a loan under the government-assisted scheme quickly and at a lower interest rate. With the additional financing, I can now focus on managing our immediate challenges and planning for the eventual recovery with more confidence.”
Another client that has worked with UOB to tap the TBLP is Consort Bunkers Pte Ltd, a bunkering supplier and logistics and barging services provider. In addition to the challenges faced by the industry from a slowdown in global trade volume, the company’s operations have also been disrupted by the “circuit breaker” measures.
Mr S.K. Yeo, Managing Director and Founder, Consort Bunkers Pte Ltd, said, “This period has been particularly trying for us as we face the twin challenges of COVID-19 and a weak sentiment perpetuated by the fall in oil prices. In order to ride out this storm, we need to ensure that we have sufficient working capital to run our business smoothly. From the start of the COVID-19 pandemic, UOB has been steadfast in its support, constantly keeping in close contact with us. When the government announced additional measures to help businesses access lower-cost financing, the Bank was quick to help us apply for it. The digital application process was hassle-free and I was able to access the funds about a week after applying for it. We are glad to be able to count on the support of our long-time financial partner UOB, as we navigate the uncertainties ahead.”
In addition to helping its clients tap funding under the government-assisted schemes, the Bank also announced S$3 billion in relief assistance for those affected by COVID-194. The measures include allowing affected businesses to rework their principal repayments and to service only their loan interest for up to one year and offering financing liquidity against mortgage security.
1 The TBLP, administered by ESG, provides businesses with access to working capital. The Government increased its risk share for ESG loans that were initiated from 8 April 2020 onwards from 80 to 90 per cent. https://www.smeportal.sg/content/smeportal/en/bizguides/finance/2020/solidarity-budget-2020-summary.html
2 The consumer staples sector comprises companies that produce and sell items considered essential for everyday use. These include household goods, food, beverages and hygiene products.
3 The MAS SGD Facility for ESG Loans was launched on 20 April 2020 to lend Singapore Dollars to eligible financial institutions in support of their lending to SMEs under the ESG Loan Schemes. https://www.mas.gov.sg/news/media-releases/2020/mas-sgd-facility-for-esg-loans
