Singapore Lenders Launch New Debt Restructuring Scheme for SMEs

The scheme will facilitate a common approach to SME debt restructuring among 16 participating lenders. A separate scheme has been launched for sole proprietors and partnerships.

ABS (The Association of Banks in Singapore), with the support of the FHAS (Finance Houses Association of Singapore), has announced the launch of a new industry programme to help SMEs restructure their credit facilities across multiple lenders.

For SMEs with viable businesses, the ESS-C (Extended Support Scheme – Customised) programme will facilitate a coordinated approach to restructuring existing credit facilities across multiple banks and finance companies, ABS said.

The industry effort was led by UOB – together with Citibank Singapore, DBS, HSBC, Maybank Singapore, OCBC, and Standard Chartered Bank – and the MAS (Monetary Authority of Singapore).

In total, 16 banks and finance companies will offer the ESS-C programme. SMEs will be able to apply for the ESS-C from Monday (2 November) until 30 June 2021.

"Given the depth of this crisis, the financial industry has come together to adopt a collective approach to help SMEs with viable business models restructure their debt," said ABS Director Ong-Ang Ai Boon. "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."

The ESS-C programme is part of the package of extended relief measures announced by MAS, ABS, and FHAS on 5 October to assist borrowers facing cashflow challenges due to the Covid-19 pandemic.

More information on the ESS-C programme is available here.

Separately, non-profit organisation CCS (Credit Counselling Singapore) has launched a new scheme from Monday which will allow sole proprietors and partnerships facing financial distress to seek assistance to restructure business debts owed to two more lenders, provided such debt is unsecured and does not exceed SGD 1 million.

The 'Sole Proprietors and Partnerships' (SPP) Scheme allows for lower monthly instalment payment for unsecured business borrowings by extending the loan repayment period to a maximum of eight years, with the interest rate capped at 7% p.a.

The SPP scheme is supported by ABS, MAS, ESG (Enterprise Singapore), and the participating financial institutions under the ESG loan schemes. CCS was set up in the wake of the 1997 Asian financial crisis.

More information on the SPP scheme is available here.

The new schemes complement the Ministry of Law's Simplified Insolvency Programme, which provides restructuring and winding up assistance to micro and small companies with single or multiple creditors, with liabilities up to SGD 2 million.