Take-up and Split of Loan Capital SMEs and Large Firms, Interest Rates Paid by Banks and Expected Repayment Period for Banks
Ministry of FinanceSpeakers
Summary
This question concerns Assoc Prof Jamus Jerome Lim’s inquiry regarding the utilization and terms of the $22 billion loan capital set aside for COVID-19 support. Deputy Prime Minister and Minister for Finance Heng Swee Keat stated that the Temporary Bridging Loan Programme (TBLP) supported 16,349 companies—99.7% being SMEs—with $13.1 billion in loans as of 31 August 2020. Participating Financial Institutions (PFIs) can access government capital at 1.9% interest for up to five years or the MAS SGD Facility at 0.1% interest for two years. Most PFIs currently utilize the MAS facility, and interest rates charged to borrowers for TBLP loans have been lowered to between 1.5% and 3.0% per annum.
Transcript
6 Assoc Prof Jamus Jerome Lim asked the Deputy Prime Minister and Minister for Finance (a) to date, how many companies have taken up loans that are backed by the $22 billion loan capital set aside as part of the Government's COVID-19 package; (b) what is the split of loan capital taken up by SMEs and large firms; (c) what is the interest rate that is paid by the banks for tapping on this loan capital; and (d) what is the expected repayment period for banks tapping on the loan capital that is set aside.
Mr Heng Swee Keat: To help enterprises with credit and cash flow, the Government introduced and enhanced financing schemes, such as the Temporary Bridging Loan Programme (TBLP), as part of the COVID-19 support packages. The TBLP has supported $13.1 billion of loans and 16,349 companies as of 31 August 2020. 99.7% of these companies are SMEs, and 0.3% of them are larger firms.
Under the TBLP, Participating Financial Institutions (PFIs) can choose to tap on their own capital, Government's loan capital or the MAS SGD Facility for ESG Loans when issuing loans. For Government's loan capital, there is an interest rate of 1.9% per annum (p.a.) without collateral. The repayment period, for a PFI which borrows from the Government, is tied to the tenure of the loans offered by the PFI, i.e. up to five years. The MAS SGD Facility for ESG Loans provides funds to PFIs at 0.1% p.a. for up to two years, and requires PFIs to provide collateral.
For now, most of the loans supported under the TBLP are drawing capital from the MAS SGD Facility. Overall, we have lowered the interest rates charged by PFIs to borrowers for TBLP loans to a range of 1.5% to 3.0% p.a.