Published March 6, 2009

Big spike in govt-backed loan approvals in February

SMEs are biggest gainers as squeeze starts to ease, but hard times lie ahead

By OH BOON PING

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(SINGAPORE) The number of government-backed loan approvals jumped to 729 last month - a 77 per cent increase over January and almost tripling last year's monthly average of 250 loans, latest figures show.

According to Spring Singapore, the total loan amount in February was $332.4 million - a 134 per cent rise over January and more than four times the monthly average in 2008. Some 90 per cent of it went to small and medium-sized enterprises (SMEs).

This compares with the 411 loans amounting to $142.2 million approved in January.

Spring said the biggest increase came from the new bridging loan programme (BLP) which is targeted at all local companies, including non-SMEs.

Of the 729 loans approved in February, BLP took up 25 per cent. This represents a rise from the seven BLP loans seen last December and 44 in January.

Under the micro loan programme (MLP), some 256 loans were approved last month - up from 131 in January and 60 in December last year.

Similar increases were also seen in the loan insurance scheme (LIS), which saw monthly approvals rise to 199 from 188 a month ago.

As for the local enterprise financing scheme (LEFS), February's figure was 92, up from 48 in January.

One company that secured a LEFS loan is Asiatic Agriculture Industries. The group, which obtained a $5.2 million credit from UOB, plans to use the funds to construct a manufacturing plant to cater to demand growth for crop protection and plant nutrition products. Said MD Lawrence Chan: 'The government initiatives to assist SMEs have come in very timely to support our plant construction, procurement of equipment and working capital requirements. Banks are still open to extend facilities to support business growth based on viable business models.'

According to Spring, SMEs that are looking to apply for the government financing schemes can approach the EDCs (Enterprise Development Centres) and the EnterpriseOne Business Information Services (EBIS) for help through the Financial Facilitator Programme (FFP).

However, Spring CEO Png Cheong Boon cautioned that the greater loan approvals shows 'that the recent government measures have eased the credit situation for Singapore companies. However, we are in for more challenging times ahead. Global demand is expected to weaken and credit will remain tight globally. Businesses across most sectors will be impacted and must brace themselves to meet these challenges.'

'Not all companies will get financing, even with the government easing the credit squeeze. Companies must have a viable business model that can help them stay on course.'