Small firms to get help with debt restructuring under new schemes
The Law Ministry earlier, had introduced several measures due to Covid-19
pandemic to alleviate the impact of the crisis on business, including a moratorium on legal action over rents and contracts and raising thresholds for bankruptcy and insolvency proceedings. Small firms in financial distress due to Covid-19 will receive help from two new schemes launched on 5th October 2020 – as concerns grow that companies in badly hit industries may be plunged into bankruptcy once earlier support measures come to an end.

The Sole Proprietors and Partnerships scheme
The Association of Banks in Singapore (ABS) aims to complement this by focusing on business that are struggling to service loan commitments but are likely to recover given time and revised repayment terms. It was developed with the support of several ABS member banks, the Monetary Authority of Singapore and Enterprise Singapore. The scheme will allow businesses to work with Credit Counselling Singapore, a non-profit organization, to help restructure unsecured debt owed to 17 participating lenders, including all the main banks here. Firm can work to words securing lower monthly installment payments for unsecured borrowing by extending the loan repayment period up to a maximum of eight years. Interest rates for the restructure debt will be based on the loan’s original contractual terms, subject to a maximum of 7 percent a year. A firm can qualify if its total unsecured debt does not exceed $1 million and it owes unsecured debt to two or more of the participating lenders. Approval will be at the sole discretion of the lenders (Banks).

The extended Support Scheme – Customised (ESS-C)
Customised, is available to SMEs with viable businesses. It has been devised with the support of the Finance Houses Association of Singapore and led by United Overseas Bank and other major banks to help restructure a firm’s credit facilities across multiple banks and finance companies. The intent is to facilitate a more holistic restructuring of an SME’s loans compared to if the SME had to approach its lenders individually. SMEs have already looked at bringing down costs since the coronavirus hit eight months ago. For those who are looking to soldier on, the extra help in access to capital.The schemes would help companies wind down their businesses that may longer be viable.More information on the SPP scheme will be available from Credit Counselling Singapore (CCS) and information on the ESS-C will be provided on the Association of banks in Singapore website.

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