Loan Insurance for SMEs
Applications for the third tranche of the Loan Insurance Scheme opens next month.
The loan insurance enables SMEs to secure loans easier by insuring them against default. Under the Loan Insurance Scheme (LIS) the Government bears half of the insurance premium. When SMEs default on loans, the participating bank will be able to claim back 75% of the amount defaulted from the insurance agency.
The first two tranches of LIS generated some S$280 million in loans over 5 years. The latest tranche features lower insurance premiums and higher discretionary limits on loans. LIS is particularly relevant to businesses who are not eligible for the Local Enterprise Finance Scheme (LEFS) such as wholesalers, traders and distributors.
Spring Singapore and International (IE) Singapore have been managing this scheme since it was launched in 2002. Applications open next month.
Sources:
- 3rd tranche of Loan Insurance Scheme to generate more loans for SMEs, Channel NewsAsia, 19 July 2007
- Govt improves loan insurance scheme for small firmsâ€, The Straits Times, 20 July 2007
- 3rd LIS tranche to give $3b in loans to SMEs, The Business Times, 20 July 2007
