S'pore government to provide extra S$2.3b in loan support to businesses


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Nisa

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Aug 13, 2004
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SINGAPORE: From next month, the government will enhance its business financing schemes to support an additional S$2.3 billion in loans to help local firms gain access to credit in the current economic slowdown.

The measures will take effect 1st December 2008, and will be valid for one year at which point the enhancements will be reviewed for further extension.

The Ministry of Trade and Industry says the enhancements to its business financing schemes include increasing loan quantums and raising of government risk sharing of loan defaults.

Up to 124,000 local companies will be able to benefit from the schemes.

The enhancements are part of the government's efforts to act early and ensure local enterprises have sufficient resources to operate.

Under the enhancements, the government also announced a new loan scheme for working capital.

The Bridging Loan Programme allows all local enterprises with more than 10 employees to access credit of up to S$500,000. The default risk is shared equally by the government and the financial institutions.

Small businesses with no more than 10 employees will have access to SPRING's Micro Loan Programme.

The limit of this loan has been doubled to S$100,000, and the government will increase its portion of risk to 80 per cent to encourage lending to the businesses.

To encourage start-ups, the government will be raising investment capital from S$300,000 to S$1 million under the SPRING's Start-up Enterprise Development Scheme.

Its Business Angel Scheme will also be raised to S$1.5 million as a permanent feature.

The government will also temporarily increase its co-match ratio, which means that start-ups will receive S$2 from the government for every dollar an investor puts into the firm.

Firms will also gain support in branching overseas.

To help the firms spread their wings, eligibility criteria under the existing Internationalisation Financing Scheme (IFS) will be widened.

The caps will be raised to S$300 million for non-trading companies, private non-trading companies and listed trading companies.

This will help to increase the number of companies that qualify for IFS benefits.

Commenting on the move to enhance financing schemes, Senior Minister of State for Trade and Industry S Iswaran said if the take up rate exceeds expectations, more help could be available to businesses.

“This should have a positive effect on flow of funds - it is backed up by a loan line of S$3.9 billion available for enterprises to tap on. And if the take up rate exceeds expectation, we will make available more resources with the support of the Ministry of Finance."

- CNA/sf/yt

Source : - http://www.channelnewsasia.com/stories/singaporelocalnews/view/391267/1/.html
 

SilverPine

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Jul 8, 2007
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It is nice to have such arrangement.

Currently, the problems in the business environment is that, majority of the manufacturers face are, their customers are over stock, not accepting delivery as stated in their P/O delivery date, delaying payment when due, when paying only pay partial, on hold all outstanding P/O and etc.

No body know how long the bad business conditions will last.

Hold on to your job and money, start buying bank shares when it drop below ERP price.
 

Jun 5, 2008
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PenguinVille.
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It is nice to have such arrangement.

Currently, the problems in the business environment is that, majority of the manufacturers face are, their customers are over stock, not accepting delivery as stated in their P/O delivery date, delaying payment when due, when paying only pay partial, on hold all outstanding P/O and etc.

No body know how long the bad business conditions will last.

Hold on to your job and money, start buying bank shares when it drop below ERP price.
Citigroup shares already at $1.69
 

code

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Jan 9, 2005
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As much as I support the government's effort to ensure viable local SMEs are able to get through this credit crisis, I am concerned with the distortions in risk taking this scheme may encourage. Banks participating in this schemes are taking the entire benefits of lending money to SMEs while the govt bears half the risk if the SME goes under. At the end of the day, it's taxpayers' money managed by these banks that is at risk.

A similar situation is the govt's guarantee on all deposits across ALL banks regardless their risk profile. Hence you have a situation whereby depositors move their money from safe banks to less reputable ones offer higher interest rates. If any bank were to fail, it will again be taxpayers' money at risk here.

I hope some scholars in the admin service are considering the moral hazard and behavioural distortions the above policies would create.
 

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