Successfully securing business loans
Maybank Webinar – “Successfully Securing Business Loans” held on 9th October 2020
The webinar commenced with an introduction by Ms Radha Nadarajan on the topic and the speakers of the session. The Chairperson of the session, Mr Parthiban Murugaiyan, Member Board of Directors, SICCI was invited to give the introductory remarks and Mr Parthiban welcomed the participants and thanked Chairman of SICCI, Dr T. Chandroo, the SICCI Secretariat, and Ms. Elina Yeo from Maybank on working together for a webinar which is a small start to a series of webinars on Financing for SMEs. Mr Parthiban highlighted SICCI’s efforts to support businesses during COVID-19, including the establishment of the SICCI
COVID-19 Task Force (SCTF)
He explained that SICCI, through the SCTF and the SME Centre, had received feedback from many businesses on the struggles they were facing in securing bridging loans. He explained that the webinar with Maybank was organised to help businesses acquire insights into the loan approval process and to manage expectations of SMEs.
Mr Parthiban proceeded to invite Ms Elina Yeo from Maybank to share her insights. With 22 years of banking experience, 15 of which was with Maybank, Mr Parthiban shared that she would address the concerns of both the banks and the SMEs.
Ms Yeo warmly greeted participants and thanked SICCI for organising the webinar. She shared Maybank’s corporate history and highlighted the bank’s commitment to helping businesses through the COVID-19 pandemic.
She articulated Maybank’s “5 C” criteria, namely Character, Capital, Capacity, Conditions, and Collateral.
“Character’’ refers to a company’s history and experience. This is assessed sometimes through the credit bureau. Ms Yeo explained that banks needed to weigh the borrower’s willingness and ability to repay loans. ‘’Capital’’ refers to the SME’s commitment to his/her business and tangible net worth. Banks would like to understand how SME’s manage business volatility and losses before they decide on available financing options. ‘’Capacity’’ refers to the company’s cash flow, which indicates one’s ability to repay loans. This is partially assessed through the company’s bank statements in the past 6 months. This is a standard request for loan applications. ‘’Conditions’’ refer to the market environment in which banks assess the viability of the loan. ‘’Collateral’’ refers to an asset that the bank accepts as security for a loan. Collateral may take the form of real estate or other kinds of assets, depending on the purpose of the loan.
Banks also scrutinise the minimum turnover of companies which determines the loan options available to the SME. In cases where newer companies cannot obtain loans or where companies do not meet minimum turnover conditions, such companies can opt for government grants instead. Ms Yeo went on to explain the different loans and relief schemes which are currently available as well as their individual merits and conditions. She also spoke of Maybank’s various digitalisation packages which help companies in their business transformation efforts.
The Q&A session followed immediately after her presentation. Ms Yeo clarified some concerns from participants, including questions on credit, loan processing periods, collateral, and what banks require from businesses applying for loans. Mr Parthiban enquired about funding support for start-ups as the latter struggled to secure loans.
Ms Yeo replied that most banks do not offer loan packages for start-ups as they are primarily served by angels and venture capital funds. Mr Parthiban also asked if banks would consider companies’ reduced earnings owing to COVID-19 in ascertaining eligibility for loans.
Ms Yeo clarified that even though the government has taken 90% of risk share in the TBLP (Temporary Building Loan Programme), banks still formulate the criteria for eligibility. Banks may not be willing to take risks with companies in certain industries, such as the airlines or travel industry.
Following the Q&A, CEO of SICCI, Mr Johnson Paul delivered a vote of thanks, conveying SICCI’s appreciation for Chairman SICCI, Dr T Chandroo, Ms Yeo from Maybank, Mr Parthiban, and the participants. Mr Johnson Paul also reiterated SICCI’s commitment to support businesses and directed participants to SME Centre@SICCI on enquiries related to government grants and reliefs.