OCBC Bank disburses government-assisted loans to small businesses

Photo by Terence Ong

Come 30 June 2020, OCBC Bank expects the quantum of the government-assisted SME loans it lends out to help small businesses during the COVID-19 pandemic to hit the S$1 billion mark. This fully utilises the support given by the Monetary Authority of Singapore under its low-cost SGD Facility.

OCBC Bank will pass all the cost savings from the Facility to these small businesses. Further cost savings will be derived from the waiver of the Bank’s loan processing fees.

With loan approval of two days and disbursement of the funds into the pockets of the small businesses within a week, OCBC Bank seeks to extend funding support to SMEs to quickly address their pressing cashflow needs.

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The cost savings from the lower interest rate extended by the Facility will be completely passed on to the customers, by bringing the interest rate of the government-assisted Temporary Bridging Loan to 2% to 3%.

OCBC Bank has been reaching out to its small business customer base, engaging about 80% of its borrowing relationships within two months. One in two small businesses in Singapore has a relationship with OCBC Bank.

There has been a spike in the volume of applications for the relief measures in the last two months by more than 10 times as the financial strain arising from the Circuit Breaker added to an already challenging situation.

In particular, the manufacturing, construction, trading and distribution, and services businesses are increasingly looking for support.

The loan amount of S$1 billion for small businesses projected for the three months from April to June will exceed the total government-assisted loans disbursed to the same customer segment during the 2008-9 Global Financial Crisis.

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, OCBC 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 last Global Financial Crisis.

These loans are part of OCBC Bank’s range of targeted relief measures that it has rolled out to businesses to tide over this difficult period. The process has been digitalised and the requirements simplified for existing customers. Where hardcopies of documents were required before, it has adapted to accept the electronic copies with digital signatures during this circuit breaker period.

Mr Linus Goh, Head of Global Commercial Banking, OCBC Bank, stated that  “Small businesses around the world have been the hardest hit from this global pandemic as the impact has spread widely across all industries.”

“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 loans,” he continued.

“The announcement on the new Monetary Authority of Singapore (MAS) low-cost SGD facility is a timely boost to help SMEs in the escalating financial hardship, especially the small businesses,” he explained.

Mr Kurt Wee, President of the Association of Small & Medium Enterprises (ASME), added that proactively reaching out to SMEs “really makes a difference, not just financially but also psychologically.”

“The rapid support given to small business arising from the coordination among banks like OCBC, MAS and ESG is also unprecedented. This makes me believe that we can all bounce back and then grow from strength to strength after the outbreak,” he concluded.