Individuals and small and medium-sized enterprises (SMEs) facing cashflow difficulties will now have more time to repay their loans.
The extension in support measures will progressively expire over 2021, announced the Monetary Authority of Singapore (MAS), together with the Association of Banks in Singapore (ABS), as well as the Finance Houses Association of Singapore (FHAS).
Since April, banks and finance companies have been providing payment deferrals for individuals and SMEs facing short term challenges in servicing their loan instalments. The various relief measures have helped ease the cashflow pressures faced by these individuals and SMEs, and are set to expire by Dec 31.
According to MAS, borrowers who are able to resume paying their loan installments in full, should start doing so from Jan 1, 2021.
“MAS and the financial industry recognise, however, that many individuals and businesses will continue to experience cashflow pressures into early 2021. The extended support measures will give such individuals and businesses currently under loan repayment deferrals more time to resume repayments. The support measures will also be available to borrowers previously not under any payment deferral, but who are now facing cashflow challenges,” says the central bank in an Oct 5 statement.
MAS, ABS and FHAS have also reduced installment plans for property loans.
Eligible individuals with residential, commercial and industrial property loans who are unable to resume making full loan repayments may apply to their respective bank or finance company to make reduced instalment payments pegged at 60% of their monthly instalment, for a period of up to nine months.
For most individuals, the 60% reduced monthly instalment will cover interest and partial principal payments.
The option is available to individuals who can prove that their income has been impacted by at least 25% during the pandemic, with property loan payments that are not overdue by more than 90 days. This is regardless of whether they have taken up payment reliefs previously.
Individuals with renovation and student loans may apply to their respective banks to extend their loan tenures to up to three years, which will lower their monthly installements and ease their cashflow burdens.
Individuals should be able to prove that their income have been impacted by the pandemic, and that their loan payments are not overdue by more than 90 days.
Individuals who meet the above criteria for property, renovation, and student loans can apply for assistance from Nov 9 till June 30, 2021.
MAS, ABS and FHAS will also be extending support to individuals who are experiencing difficulty in repaying their personal unsecured credit and debt consolidation plans.
SMEs in need of further relief should first consider the Extended Support Scheme - Standardised (ESS-S).
Under the ESS-S SMEs in Tier 1 and 2 sectors may opt to defer 80% of their principal payments on their secured loans granted by banks or finance companies, or under Enterprise Singapore’s (ESG) Enhanced Working Capital Loan Scheme and Temporary Bridging Loan Programme till June 30, 2021.
SMEs in other sectors may opt to do the same up to March 31, 2021.
For SME borrowers with more than one lender, they can also rely on the Extended Support Scheme - Customised (ESS-C) to facilitate the restructuring of a borrower’s loans across multiple financial institutions.
Borrowers can apply for both the ESS-S and ESS-C from Nov 2 onwards.
MAS’s managing director Ravi Menon says, “MAS and the financial industry have put much care in the design of the extended credit support measures. We want to continue providing relief to borrowers facing cashflow challenges while encouraging them to resume loan repayments to the extent they are able to so that they do not accumulate too much debt”.
“A good outcome is one where individuals and SMEs are able to use the support measures to help them tide through the current economic difficulties and emerge with a sustainable debt burden as the economy recovers,” he adds.
“With the economic impact of Covid-19 expected to carry over to 2021, the Extended Support Scheme is designed to assist individuals and SMEs who continue to face difficulties and are not able to immediately transition back to full loan repayments. Banks will work closely with those who need further support by offering other restructuring solutions,” says Samuel Tsien, chairman of the ABS.
“Amid the economic downturn due to COVID-19, some individuals and SMEs will need more time and support in restarting loan repayments after the Special Financial Relief Programme ends. Together with MAS and ABS, the finance companies in Singapore are committed to rendering our customers further cash flow assistance through the Extended Support Schemes. These schemes will help to alleviate the challenges and uncertainties these customers faced during this difficult journey,” says Ang Tang Chor, chairman of FHAS.