Cessation of SIBOR – transition of SIBOR to SORA

• 12-months SIBOR to be discontinued on 1 January 2021
• 6-months SIBOR to be discontinued after the end of 2021
• 1-month and 3-months SIBOR to be discontinued around 2024

Changes from Singapore Interbank Offered Rate (SIBOR) to Singapore Overnight Rate Average (SORA) – caused by several shortfalls in the market

• Higher volatility pegged with SIBOR as compared to SORA
• Varying spread across 1-month, 3-months, and 6-months SIBOR
• SIBOR is harder to predict as it tracks future performance on interest rates as compared to SORA, which tracks past transactions.

Who is affected by the transition from SIBOR to SORA?

Retail and Small and medium-sized enterprise (SME) loans pegged to SIBOR must start watching out for these changes in the market.

Budget 2021 – Key proposed changes to help SMEs emerge stronger in 2021

The adequate support measures from the Singapore Government have helped many SMEs in 2020 by providing business owners valuable working capital to position themselves amid the global pandemic. Let us look at some enhancement that might take place in 2021:

• Proposed extension for the Temporary Bridging Loan (TBL) till March 2022
• Quicker payment from public-sector to suppliers
• Broadening foreign worker levy to other sectors

From April 2021, Temporary Bridging Loan Programme (TBLP) quantum to be adjusted downwards from SGD5 million to SGD3 million. Risk-sharing to be reduced from 90% to 70%

As the global pandemic continues to be uncertain, the TBLP will be extended to March 2022 for another 6-months, from 1st October 2021 to 31 March 2022. Risk-sharing provided by the Singapore government has been reduced from 90% to 70%. These implementations have already cause an upward adjustment to the lending interest rates.

Singapore Government Grants & Schemes for SMEs

Be it the Productivity Solutions Grant (PSG), Enterprise Development Grant (EDG), SkillsFuture Enterprise Credit (SFEC) and many others, SME owners need to start utilizing and leverage on these grants for their businesses. Reliance Advisory have provided many of our customers with the right solution, leveraging on business financing and working capital support provided by the Government.