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
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.
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.”
