bridging loan

New Updates to the Temporary Bridging Loan Programme

bridging loan

New Updates to the Temporary Bridging Loan Programme

Hello Business Owners!

If you’ve missed out previously on the Temporary Bridging Loan Programme (ended 31 March 2022), not to worry as it has been further extended for 6 months, from 1 April 2022 to 30 September 2022, with the parameters listed below.

(Above Information is quoted from Enterprise Singapore website

bridging loan programme

Here are some of the estimated rates from our Banking Partners (may differ on a case to case basis):

dbs

Interest Rates:

1 to 2 years tenor – 4% EIR
3 to 5 years tenor – 4.75% EIR

Processing fee:
New To Bank – 1.5% or S$500, whichever is higher
New To Loan / Existing Customer  – 1.5% 

uob

Interest Rates:

1 to 5 years tenor – 5% EIR

Processing fee:
Standard Processing Fee at 2%
(We can try our best and help you lower it to 1.5%)

maybank

Interest Rates:
1 to 2 years tenor – 4% EIR
3 years tenor – 4.75% EIR
4 to 5 years tenor – 5% EIR

Processing fee:
Standard Processing Fee at 2%

My opinion on the above extension:

If you were to ask my opinion on the above, this would probably be the last time the government will extend the Temporary Bridging Loan. This is because the Singapore government is opening up, which leads to the rebound of the tourism industry, increased seating capacity in eateries, and ultimately, greater dining and shopping crowds everywhere. So, with the gradual recovery of the economy, it is highly likely that they don’t see the need to extend the TBLP any further. As you have noticed the word “Temporary”, it simply means that it will come to an end eventually.

What do I think of the changes in the Interest Rates:

The rates are expected to increase, it is just a matter of how much is the increase. From my 13 years in the corporate finance industry, a 4.75% p.a. EIR is still considered quite low for businesses.

If you are familiar with the “Microloan” in the past, it is already priced at 7% p.a. EIR, and it is a rate with the government subsidizing 50% risk share. Many business owners before the pandemic are also used to paying 8% p.a. EIR for working capital loans and 10.88% p.a. EIR for business term loans.

So if you ask me, I would not hesitate to tell you that a 4.75% p.a. EIR is still a good interest rate and the TBLP is definitely still worth taking if you need cashflow to roll or expand your business.

So what if it ends?

I predict that the government will still be giving us support, but to a smaller extent. Currently, we still have the EFS (Enterprise Financing Scheme) where Working Capital Loan (WCL) is available. The general direction for business owners would be to move back to WCL after the TBL has ended.

Currently, the WCL is priced at 6.5% p.a. EIR for some banks with 50% risk-sharing from ESG. However, the downside would be that WCL is capped at only $300k; and after $300k, government has just announced that they will be increasing the WCL limit from $300k to $500k from 1st October 2022 onwards, leaving you with the only $500k WCL at 6.5% p.a or the option of taking a Business Term Loan which is 8.8% p.a.

If you wish to know more about other financing schemes from EFS scheme, such as Trade Financing, Invoice Financing, or Property Financing. Feel free to contact us or check us out here.

And of course, if you are interested to apply for a Temporary Bridging Loan, click the button below to fill-up the form and we will get back to you shortly.

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Melvin Ho, Founder and CEO of Bizsquare Management Consultants Pte Ltd.

Fun fact about Melvin is that he likes to drink fresh milk every morning and he loves to play squash!