The facility will help financial institutions to make loans to SME borrowers more affordable and allow them to manage their cash flow better during the Covid-19 pandemic.
The Monetary Authority of Singapore (MAS) has announced further measures to ensure a high level of SGD liquidity in the banking system with a new loan facility with Enterprise Singapore (ESG), the regulator announced on Monday.
The facility will lend Singapore dollars at an interest rate of 0.1 percent per annum to eligible financial institutions, to support their lending to SMEs under ESG loan schemes.
The loan schemes covered by the facility include the Enhanced Enterprise Financing Scheme - SME Working Capital Loan (EFS-WCL) and the Temporary Bridging Loan Programme (TBLP).
Relief Measures
The government is shoring up support for small and medium enterprises hit by the Covid-19 pandemic and «circuit breaker» measures, which came into force two weeks ago, which has forced non-essential businesses to close and people to stay at home, with few exceptions.
It announced a third «Solidarity Budget» on 6 April, which aims to address the rapidly evolving pandemic and its impact on Singapore’s economy and society. A total of S$59.9 billion, or 12 percent of GDP, has been allocated to battling the pandemic. Among its measures are to help SMEs ease their cash flows, sustain their operations and retain their workers.
«With the government sharing 90 percent of the risk on such loans and MAS providing funding at almost zero cost under the facility, banks and finance companies will be able to make more loans to SMEs and at lower cost - in fact, we expect them to do so,» Ravi Menon, MAS managing director, said in a statement.
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