Temporary Bridging Loan
The Temporary Bridging Loan is a government-backed loan program launched in March 2020 to aid businesses in weathering the COVID-19 storm. This decision gave companies the security and certainty that they would be able to obtain low-cost working capital to help them with their cash flow problems.
Following the most recent extension of the Temporary Bridging Loan, qualified businesses can now borrow up to $1 million over five years. The Temporary Bridging Loan’s interest rate is likewise restricted at 5.5%, which means it can’t go any lower.
The Singapore government takes a 70% risk share in the loans to keep interest rates low and encourage banks to furnish them. Companies are accountable for repaying the entire loan amount plus interest, but when corporations are unable to complete full repayment, i.e. when a default occurs, the risk-share kicks in.
Where to Apply for TBL
You can apply for a Temporary Bridging Loan with one of 18 financial institutions. Certain banks, such as OCBC, will provide specific advantages when you apply for a TBL, such as a 50% discount on your facility cost (up to $500)
Eligibility for TBL
In the first place, your company must be eligible for a Temporary Bridging Loan. The following are some of the criteria:
- Singaporeans or PRs own at least 30% of the company. A Sole Proprietorship, Partnership, Limited Liability Partnership, or Company is an example of an entity.
- For at least six months, you must be registered and physically present for at least six months in Singapore.
Requirements for Personal Guarantee
At the same time, entrepreneurs should be aware that if they apply for a Temporary Bridging Loan for their firm, they may be forced to submit a 100% personal guarantee.
This serves as “not simply a means of security but also communicates a commitment by the guarantor(s) to the loan obligation,” according to Enterprise Singapore (ESG). If your company defaults on the loan, the bank will follow conventional commercial recovery procedures before demanding any unrecovered funds from Enterprise Singapore (ESG).