The Monetary Authority of Singapore (MAS) has rolled out a loan package (under the Enterprise Financing Scheme) available to all qualifying SMEs to ensure continued to assess to credit.
The key points for SMEs to note about MAS loan package are:
- This is a Loan with obligations to repay and not a handout. Although the rates are at an unprecedented low, Business owners still have the responsibility to plan their own finances to solve their current cash flow issues and future repayments.
- Business owners should not apply for deferment of payment unless necessary. Deferment of payments, although is good for cash flow planning, could impact loan applications and will also result in additional interest. Business owners have to do their sums before applying for a loan and not because it is an easy way out. It should be saved as a backup plan if the situation worsens.
- Business owners should also take a further view and be disciplined in their spending. Practice prudent spending and ensure that employees are not laid off as re-hiring and re-training could result in additional unwanted costs in the future.
- The loan takes time to be approved and disbursed. Do not assume money will come in immediately. Business owners have to plan their current cash flow accordingly to avoid inconvenience due to a misalignment in timing.
SMEs must also understand that this is still subjected to individual banks’ approval. And banks DO NOT want to lend to unqualified borrowers.
Unqualified borrowers are classified as:
1. Having a poor credit score
2. Poor maintenance of their bank statements
3. Having too much borrowing or debts
4. Not falling in line with the Debt Servicing Ratio or Loan Stacking
Start preparing your documents listed below to speed up the process such as:
- Latest Notice of Assessment and IC of ALL directors and shareholders
- All operating bank statements for the last 6 month
- Financial statements for the last 2 years
- Business Registration / ACRA
Be prepared and stay Resilient!
Lenny Lim, Executive Director, Beacon Financial Services
For more information, I can be contacted at firstname.lastname@example.org