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Coronavirus pandemic
This Week in AsiaEconomics

Singapore firms in aviation, construction struggle to get loans amid credit tightening

  • Loan brokers say banks have tightened the purse strings for worst-hit business sectors as the coronavirus pandemic drags on
  • Loan approval rates in some sectors have fallen to as low as 20 per cent, although banks claim they have stepped up support for firms

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Singapore’s financial business district has seen a notable slowdown since the start of the Covid-19 pandemic, with businesses suffering from their inability to obtain loans from local banks. Photo: AFP
Derek Wong
As Singapore’s economy continues to reel from the impact of Covid-19, a lifeline for companies in the worst-hit business sectors is starting to dry up.
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Despite a government pledge to backstop bridging loans - credit extended to companies to tide them over during difficult periods - companies in ailing industries such as aviation and construction are finding it harder to get funds.

While such loans were disbursed more freely earlier in the year amid strong government support and a low-interest-rate environment, banks have tightened the purse strings in recent months as the pandemic drags on.

Loan brokers, which help companies secure credit from banks, have noted a stark contrast in loan approvals during Singapore’s circuit breaker (or lockdown) in April and May, and after.

Lenny Lim, executive director of loan broker Beacon Financial Services, said the lockdown was, in fact, the “best period” to get loans, with clients in sectors such as construction, tourism and events seeing an approval rate of more than 90 per cent. But after the circuit breaker, the approval rate in these industries fell to between 20 and 55 per cent.

“Even if your bank balances are strong but you are in these industries, the bank may not take the risk and approve the loan,” Lim said. “The screws have been tightened.”

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