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SINGAPORE – Relief measures to help individuals and small and medium-sized enterprises (SMEs) with cash flow difficulties will run until 2021.
This is intended to give those who have applied to defer loan payments more time to resume servicing their debt, the Monetary Authority of Singapore (MAS) said on Monday (October 5), in its joint announcement with the Association of Banks of Singapore (ABS) and the Finance Houses Association of Singapore.
Waivers are also available to those who have not previously requested to defer payments but are now facing cash flow challenges.
The extended measures will allow both individuals and businesses to gradually move to full loan repayments, as the central bank and the financial industry acknowledge that many will continue to experience cash flow pressures until early 2021, MAS said.
But he urged borrowers who can resume paying full loan installments to start doing so from January 1, 2021, as longer deferral increases their overall debt.
“We want to continue to provide relief to borrowers facing cash flow challenges while encouraging them to resume loan repayments to the extent that they can so that they do not accumulate too much debt,” said MAS Managing Director Ravi Menon.
“A good outcome is one where individuals and SMEs can use support measures to help them overcome current economic difficulties and emerge with a sustainable debt burden as the economy recovers,” he added.
RELIEF FOR INDIVIDUALS
Measures for which the application period has been extended to June 30 of next year include converting credit card balances into a loan with a lower interest term.
Those unable to resume full loan repayments on their home loans can request to make reduced installment payments set at 60 percent of their monthly payment, for a period of up to nine months.
Individuals who provide student loan and renewal services can also apply to extend loan tenures for up to three years.
The eligibility criteria for these two measures include proof of loss of income. The application period closes on June 31, 2021.
As of August, some 36,000 applications had been submitted to defer home loan payments.
“Generally speaking, the number of mortgage deferrals has decreased, from the peak in April to June 2020, when more people were affected by the circuit breaker measures,” said a MAS spokesperson.
There were nearly 34,000 mortgage relief applications approved as of June.
DBS Bank has approved some 9,000 mortgage loan assistance applications totaling $ 5.2 billion so far, while OCBC Bank has approved more than 8,000 mortgage, auto and renewal loan assistance applications for a total of more than $ 5 billion.
UOB has received more than 8,000 requests to defer mortgage payments and more than 4,000 requests to convert unsecured debt into lower-cost term loans. He said he approved most of them.
RELIEF FOR SMES
More support has also been offered to SMEs by allowing loan repayment deferral beyond the end of this year.
Under the previously announced measures, companies could request to defer principal repayments on their guaranteed loans from banks or finance companies until December 31, 2020.
The Extended Support Scheme: standardized will allow companies in the sectors most affected by the Covid-19 pandemic to defer 80 percent of principal payments until June 30, 2021.
This applies to SMEs in the following sectors: aviation and aerospace, tourism, hospitality, conventions and exhibitions, built environment, licensed food stores and concession stands, qualified outlets, arts and entertainment, marine and offshore , as well as ground transportation.
Companies in other sectors can request to defer 80 percent of principal payments until March 31, 2021.
Loans made under the Enterprise Singapore Enhanced Working Capital (ESG) Loan Program and Temporary Bridging Loan Program are also eligible for deferral.
As of September, more than 18,000 businesses had borrowed under ESG schemes, with a total loan amount exceeding $ 14.5 billion.
More than 5,400 applications have been submitted to defer principal payments on guaranteed term loans until August.
Banks and finance companies are also developing a customized support scheme to facilitate multi-lender restructuring, for companies where the standardized scheme is not suitable.
This Extended Support Scheme – Custom is intended to complement other restructuring assistance schemes, such as the Simplified Insolvency Program proposed by the Ministry of Law, MAS said.
ABS President Samuel Tsien said: “Banks will work closely with those who need more support by offering other restructuring solutions.”
Applications for both schemes will begin on November 2.
You can find more details about the help measures here.
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