Demand for new loans, moratoriums tapering since peak in Q2, say banks

SINGAPORE – More than 18,000 firms have taken out loans amounting to over $14.5 billion under schemes overseen by Enterprise Singapore (ESG) as of Sept 30.

Most of these loans were taken up between March and June, when over 10,600 companies applied for some $9.4 billion in loans under the Temporary Bridging Loan Programme and the SME Working Capital Loan scheme.

In addition, companies made over 5,400 applications to defer principal payments on secured term loans amounting to more than $11.5 billion as of August, the Monetary Authority of Singapore (MAS) said.

Applications for new loans and loan moratoriums from both companies and individuals peaked between April to June and have since slowed.

But those that continue to face financial strain amid the coronavirus pandemic will find much-needed support with the extension of credit relief measures announced by the MAS on Monday (Oct 5), banks said.

The tapering off of new loans and moratoriums sought since July is due to small and medium-sized enterprises (SMEs) seeing improved cash flow following the resumption of business and support from various relief measures implemented to help companies tide over the Covid-19 crisis, said OCBC Bank head of global commercial banking Linus Goh.

“SMEs in several industries which were harder hit such as the travel-related sector as well as construction continue to be adversely impacted and will benefit from a further extension of the loan moratorium programme,” he added.

Most borrowers with viable business models have been prompt in repaying their loans, a DBS Bank spokesman said.

The bank has approved close to 9,700 loans totalling over $5 billion to SMEs through the ESG loan schemes, of which more than 8,300 loans were granted to micro and small businesses.

“We made special effort to reach out to micro and small enterprises, as these are typically the most under-served and vulnerable of businesses in an economic crisis,” said DBS Singapore country head Shee Tse Koon.

As for individuals seeking reliefs, MAS said around 36,000 applications to defer payment on property loans amounting to around $29 billion were approved as of August.

Similar to the drop in applications by SMEs, the number of mortgage deferments from individuals has also tapered off since the April to June peak.

UOB head of group personal financial services Jacquelyn Tan said: “While there was a spike in calls during the early days of the (debt relief programme), we have seen a drop of more than 50 per cent in new loan deferral applications in the past two months.”

An MAS spokesman said: “As at end-June 2020, there were nearly 34,000 approved mortgage relief applications. This has since come down, and the total number of approved mortgage relief applications as at end-August 2020 is now approximately 36,000.”

At the same time, over 8,100 applications have been made to convert personal unsecured credit, such as credit card balances, to lower-interest term loans with a notional value of more than $200 million.

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