Supporting Our SME Community Amid A Crisis

Author: Joyce Tee, Managing Director and Group Head, DBS SME Banking

We are all aware that our SMEs are a key engine of Singapore's economy. Making up 99% of all businesses here, these local enterprises contribute to almost half of the country’s GDP, and close to two-thirds of its workforce. And as more of them spread their wings abroad, SMEs are positioning themselves to be a future driver of Singapore’s growth.

Unfortunately, when the economy is adversely impacted by a crisis like the COVID-19 outbreak, it is our SMEs and their employees who bear with the brunt of the fallout. In early February, we conducted a dipstick poll of about 100 of our SME clients to find out what their top financial challenges were during this uncertain period. Most were concerned that their cash flows would be choked off as a result of the sharp falloff in demand, in addition to dealing with operational costs such as rental and salaries. 

The spread of the coronavirus has hit the tourism, retail and F&B sectors hard. Supply chains have also been disrupted despite the supplier finance agreement, affecting the manufacturing sector. This has an unfortunate knock-on effect, as SMEs are unable to complete and fulfil orders by retailers. The building and construction sector is grappling with similar challenges. SMEs also face workforce issues, especially in the delayed return of their migrant workforce after the Lunar New Year holiday, resulting in lower productivity and delayed project delivery. 

Welcome Budget relief

Recognising that businesses were suffering as a result of COVID-19, I am pleased that the Singapore Government unveiled a highly-expansionary Budget on 18 February 2020 to help tide them over the crisis. Budget measures included a S$4 billion Stabilisation and Support Package which includes a Jobs Support Scheme to subsidise the wages of local workers, as well as a 25% corporate income tax rebate for all tax-paying companies in 2020, capped at S$15,000 per company.

Meanwhile, the existing Enterprise Financing Scheme’s Working Capital Loan will see its maximum loan quantum doubled to S$600,000, giving SMEs easier access to working capital. Tenants and lessees of government-managed properties can also request for more flexible rental payments.

Encouragingly, the Government has not neglected its ongoing efforts to help businesses transform in the long run, even as it provides relief in the near term. In this regard, a new Enterprise Grow Package was announced to help enterprises adopt digital solutions and support their internationalisation efforts. An Enterprise Transform Package was also launched to groom business leaders of promising SMEs.

While the business community has welcomed the generous assistance, some market watchers warn that additional help may be needed if the current outbreak is not resolved soon, and the Singapore economy is pulled into an extended slump.

Standing by our SMEs in their time of need

Last month, DBS announced a range of liquidity relief measures and other initiatives to help not only businesses but also retail customers and communities impacted by the COVID-19 situation. As Singapore’s largest bank, we need to do our part to lend a helping hand to our clients and the public-at-large; and I know everyone in the bank is working hard to continue this support and care. 

Specific to our SME clients, we’ve introduced measures that look at addressing their urgent cash flow needs in light of the COVID-19 situation, and just as important, helping SMEs get back on the road to recovery through supporting their digital adoption and transformation efforts. 

Designed to complement the Government’s assistance, these measures include a six-month principal repayment moratorium for SME property loans, and an extension of import facilities of up to 60 days to provide immediate cash flow support for businesses affected by disruptions to their supply chains. We also launched the Digital Business Loan where businesses need not submit any financials for funds up to S$50,000 that they can access the next working day upon loan acceptance. In addition, the loan comes with an automatic fee waiver and a 3-month interest-only repayment feature, providing SMEs with more flexibility and relief. 

Meantime, our Life Bancassurance partner, Manulife, has extended our SME customers enhanced coverage to protect against business disruptions due to the outbreak, while our General Bancassurance partner, Chubb, has introduced a first-in-market COVID-19 cover to help our SME customers and their employees tide through this period.

At the same time, we are leveraging our unique expertise as the World’s Best Digital Bank to support SMEs in their efforts to minimise business disruption during this period while advancing their digital transformation for the longer term.

We introduced a suite of “contact-free” trade financing digital solutions to eliminate the need for the physical submission and manual processing of paper-based applications for 11 everyday trade financing services, as well as increased the number of FAST transactions each month to help SMEs make payments or transfer funds digitally. For more details about how else our partners and us can support you during this challenging time, please check the list of relief measures here. 

Supporting our national upskilling efforts

We urge SMEs to take this temporary downtime to deepen their digital capabilities so that they will in a stronger position to capitalise on the eventual recovery.

In this regard, DBS is moving its popular SME Academy training courses online, enabling SME owners and employees to continue upskilling themselves in the safety of their homes and offices. Additionally, DBS BusinessClass, an engagement programme designed for SMEs, will continue to roll out bite-size business content through its various outreach channels. 

At DBS, the needs and challenges of our customers are always at the top of our minds. I believe this is especially true during these trying times. Our focus today is not only to partner our SMEs in meeting today’s challenges with the COVID-19 situation, but to position them better for recovery and to seize the growth opportunities that will emerge when the crisis passes. Our SME customers have always trusted us to do right by them, and we remain committed to standing with the SME community through this period. 

I’m heartened to hear that the Government is looking at rolling out a second stimulus packaged. It will be of utmost priority for us to study the details of the package when it is unveiled, as it will then be all about getting additional relief measures to SMEs as quickly as possible for them to ride through this challenging period.