MAS, together with the Association of Banks in Singapore (ABS) and Finance Houses Association of Singapore (FHAS), announced an extension of support measures to help individuals and small and medium-size enterprises (SMEs) facing cashflow difficulties to transition gradually to full loan repayments. These extended measures will progressively expire over 2021. For individuals, these support measures include extended assistance for personal unsecured credit and debt consolidation plan. For SMEs, these support measures include partial deferment of principal payments on secured SME loans and loans under enterprise Singapore, in addition to the customized restructuring programs.
Since April 2020, banks and finance companies have been providing relief measures for individuals and SMEs amid the COVID-19 pandemic and these measures are set to expire by December 31, 2020. As economic activities continue to open up, borrowers that are able to resume paying their loan instalments in full should start doing so from January 01, 2021. However, for individuals and businesses that will continue to experience cash-flow pressures into early 2021, these extended support measures will allow more time to resume repayments. The support measures will also be available to borrowers previously not under any payment deferral, but who are now facing cash-flow challenges. The extended support measures include the following:
- Extended assistance for personal unsecured credit and debt consolidation plan—Certain individuals, such as those who face difficulty repaying their unsecured revolving credit facilities, those who can provide proof of income impact of at least 25%, and those with repayments that are between 30 and 90 days past due, may apply to their lender till June 30, 2021 to convert their outstanding balances to term loans at a reduced interest rate. Individuals on Debt Consolidation Plans, who can provide proof of income impact and with repayments that are between 30 and 90 days past due, may apply to their lender till June 30, 2021 to extend the loan tenure of their Debt Consolidation Plans for up to five years.
- Partial deferment of principal payments on secured SME loans and loans under Enterprise Singapore—SMEs in need of further relief should first consider the Extended Support Scheme—Standardized (ESS-S). Under this scheme, SMEs in Tier 1 and Tier 2 sectors may opt to defer 80% of principal payments on their secured loans granted by banks or finance companies as well as loans granted under Enterprise Singapore’s (ESG) Enhanced Working Capital Loan Scheme and Temporary Bridging Loan Program till June 30, 2021. SMEs in other sectors may opt to do the same up to March 31, 2021. This relief will be available to all SMEs that are not more than 30 days past due on all their loan payments. SMEs whose loans have been granted principal moratorium should also not have overdue interest payments for these loans. Borrowers can apply for ESS-S from November 02, 2020 onward.
- Customized restructuring programs—Banks and finance companies are also developing an Extended Support Scheme—Customized (ESS-C) to facilitate the restructuring of a borrower’s loans across multiple financial institutions. The ESS-C complements other restructuring assistance schemes under the proposed Simplified Insolvency Program (SIP) for micro and small companies and scheme for sole proprietors and partnerships (SPP scheme). The ESS-C will be available for SMEs with more than one lender for whom the SPP scheme and SIP may not be suitable. More details on the ESS-C will be provided in the coming weeks. Borrowers can apply for ESS-C from November 02, 2020 onward.
Keywords: Asia Pacific, Singapore, Banking, Credit Risk, COVID-19, Payment Deferrals, Loan Repayment, Basel, MAS
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