ST " Govt cuts biz risk share

Dec 28, 2009
Govt cuts biz risk share
By Gabriel Chen



With the economy in better shape, the Government is cutting the share of the risk that it will bear in business loans under a key programme designed to get banks to lend to cash-strapped companies. -- ST PHOTO: SAMUEL HE

WITH the economy in better shape, the Government is cutting the share of the risk that it will bear in business loans under a key programme designed to get banks to lend to cash-strapped companies.

The loans are part of a larger assistance package introduced between November last year and early this year to help companies ride out the economic slowdown.

A key aspect of the initiative involved the Government taking on more risk in bank loans as well as helping out with financing international trade.

The initiatives, which fall under the Special Risk-Sharing Initiative (SRI), include the Loan Insurance Scheme, Local Enterprise Finance Scheme, Micro Loan Programme and the Bridging Loan. The changes, which kick in from Feb 1, are sweeping - loan quantums, tenures, and risk share for instance will be lowered.

Under the Bridging Loan Programme, for example, the loan quantum limit for firms seeking loans for working capital will be reduced from $5 million to $2 million - which will meet the needs of 98 per cent of SMEs.

The Government's share of the risk for this programme will also be adjusted from 80 per cent to 50 per cent, while the maximum loan tenure will be revised from four to two years.