BUSINESSES in Singapore facing cashflow and financial constraints due to the novel coronavirus may find some respite in new initiatives announced this week.
United Overseas Bank (UOB) on Wednesday said it has set aside S$3 billion to provide companies in Singapore, especially small- and medium-sized enterprises (SMEs), with relief assistance to tide over the negative impact of the covid-19 outbreak on their business.
The bank's relief measures would enable those affected companies to have more flexibility in their cash flow management. This comes as SMEs are due to have near-term liquidity needs, UOB said.
UOB clarified that the sum of S$3 billion will not be taken as impairments, as these companies have good track records and have been servicing their repayments promptly.
Such measures would mean allowing affected businesses to rework their principal repayments and to service only their loan interest for up to one year; extending up to one year working capital financing of up to S$5 million; and offering financing liquidity against mortgage security.
For the latter, UOB is offering flexibility for businesses' secured loans, which could come in the form of an increased loan amount or an overdraft facility.
In a media statement, Wee Ee Cheong, deputy chairman and CEO, said: "For most companies, especially the SMEs, cash flow and financing are key to them sustaining their business. As their long-term banking partner, we believe our added support can help alleviate the business disruption and pressure from the ripple effect of the epidemic."
UOB said it will assess retail customers who are affected by the current circumstances on a case-by-case basis.
The bank declined to comment on when the cost of relief measures will hit its books, with the bank now in the black-out period as it will release its FY19 results on Feb 21.
Separately, JL Family Office - the family office of Singaporean property tycoon John Lim, ARA Asset Management and Straits Trading Company - announced setting up a S$5 million fund to extend short-term loans to businesses in Singapore amid the virus outbreak.
"We're looking at people who have good businesses, and whose businesses are disrupted," Chew Gek Khim, executive chairman of Straits Trading said in a statement.
Starting Feb 15, SMEs will be able to apply for loans of up to S$50,000 for up to a period of six months, through online crowdfunding platform Minterest.
The interest rate will be pegged at 0.5 per cent per month - compared to industry rates of 7-18 per cent, according to Mr Lim. There will also be a 2 per cent processing fee charged by Minterest to cover loan administrative expenses, half of what it usually charges.
The fund is only meant to help businesses and does not mean the entities are investing in the businesses. To be eligible, the companies must be GST (goods and services tax) registered and be majority-owned by Singaporeans and/or Singapore permanent residents. They must also have been in operation for the past 12 months.
Face-to-face meetings will also be conducted with borrowers to determine if their capital needs are genuine, Mr Lim added.
CIMB Bank has also said it will provide financial support to businesses and individuals affected by covid-19 by bumping up its e-Supply Chain Financing programme.
The bank is expecting to bolster the programme with a limit of up to S$100 million set aside, in order to make working capital financing support available to the suppliers community on the platform of its e-procurement service provider partners.
In addition, CIMB Consumer Banking will accommodate requests from customers affected by the covid-19 outbreak to restructure or reschedule their loans and financing according to terms and conditions.
Meanwhile, StarHub on Wednesday announced that SMEs will be able to subscribe to the softphone app of StarHub's cloud telephony solution for free, from Feb 13 till Sept 1, 2020.
With additional reporting by Vivienne Tay
CREDIT: Vivien Shiao
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