United Overseas Bank (UOB) on Tuesday said it has approved S$4 billion in loans under Enterprise Singapore's (ESG) temporary bridging loan programme (TBLP) since the government increased its risk-share of such loans to 90 per cent a month ago.
The loans were extended to the bank’s mid-sized enterprise clients in sectors that have been hard hit by the Covid-19 pandemic. These include construction, consumer staples, retail and hospitality segments, the bank said.
UOB said it is the first bank to access the Monetary Authority of Singapore (MAS) Singdollar Facility for ESG loans, and is passing on the funding cost savings in full to its clients.
MAS in late April set up a facility to lend Singdollars at an interest rate of 0.1 per cent per annum to eligible financial institutions, which will in turn offer loans to SMEs at low cost. The central bank offers such funding by opening a window for applications for each tranche of such funding, with no cap set on the overall facility size.
The low-cost funding from MAS is available for a two-year tenor, though loans through the ESG schemes have a maximum repayment period of five years. This facility, together with the government backing against the loans, has effectively allowed banks to halve the interest rates on these loans to 2-3 per cent for most SME borrowers, when compared with rates charged in pre-Covid times.
In a statement, Eric Tham, head of group commercial banking at UOB, said: “As the Covid-19 pandemic continues to affect businesses’ day-to-day operations, many mid-sized firms are finding themselves at a critical juncture. These firms tend to have hundreds of employees and high overhead fixed costs, making it imperative for them to access additional liquidity quickly.
“Since the start of the Covid-19 pandemic, we have been helping SMEs overcome the shock to their business. We have helped our clients overcome their immediate liquidity challenges by providing loan moratoria and allowing them to repay loan interest only. Through our close collaboration with the MAS and ESG, we have helped clients access funding under the government-assisted schemes quickly and at much lower interest rates than before the pandemic. We hope that through the tripartite effort between MAS, ESG and UOB, we will be able to help these companies tide over the pandemic and plan for the eventual return to more normal operating conditions.”
UOB has also digitalised the entire loan application process for clients to receive their funds in about a week, it said.
Eng Lee Engineering Pte Ltd is one firm that secured government-assisted loans through UOB. In a media statement through the bank, managing director of Eng Lee Engineering Looi Bock Heay said the company has seen a huge strain on its cashflow, with the company having to stop operations to ensure the safety and well-being of their foreign workers residing at dormitories.
“Not only are all our projects at a standstill, we don’t know when we can resume normal operations," said Mr Looi.
"With the additional financing, I can now focus on managing our immediate challenges and planning for the eventual recovery with more confidence.”
Another UOB client that secured a temporary bridging loan under the ESG programme is Consort Bunkers Pte Ltd, a bunkering supplier and logistics and barging services provider.
S.K. Yeo, managing director and founder, Consort Bunkers Pte Ltd, spoke of the "particularly trying" period, as it faces "the twin challenges of Covid-19 and a weak sentiment perpetuated by the fall in oil prices". Mr Yeo said the bank allowed the company to access funds at lower-cost financing in about a week after "hassle-free" digital applications were submitted.
UOB had also earlier announced S$3 billion in relief assistance for those affected by Covid-19, which is separate from the S$4 billion in government-assisted loans that the bank said on Tuesday it has offered to its customers.
The separate relief measures meant allowing affected businesses to restructure their principal repayments and to service only their loan interest for up to one year. The bank has also offered financing liquidity against mortgage security.