THE Government has dished out more help for small and medium-sized enterprises (SMEs) to get access to credit to keep their businesses going.

It is offering lower interest rates for key business-financing schemes, and will increase its payment share for insurance premiums on loans made to SMEs.

The latest assistance scheme, which was announced by Spring Singapore yesterday, would help SMEs with their cash flow and the cost of credit in the current economic slowdown.

With the enhancements, interest rates for key business-financing schemes - the Micro

Loan, the Bridging Loan and the Local Enterprise Finance Scheme - will be lowered by 1.25 percentage points.

For loan tenures of four years and below, the interest rate will be fixed at 5 per cent, down from 6.25 per cent.

For loans with tenures above four years, the interest rate will be fixed at 5.5 per cent, down from 6.75 per cent.

The changes will take effect tomorrow and will apply for the full tenure of existing and new loans under these schemes, said Spring Singapore.

A $2.3-billion government loan scheme was launched on Dec 1 to help local enterprises with business funding, but SMEs have reported difficulties in getting banks to approve their loan applications.

With the enhancements announced yesterday, some 13,540 existing loans amounting to $554 million are expected to benefit from the lower interest rates, said Spring Singapore.

The participating financial institutions which administer the business-financing schemes will revise the monthly instalments and notify existing loan applicants over the next two months.

The Government will also increase its share of the insurance premium under the Loan Insurance Scheme, from 50 per cent to 90 per cent, to further ease the cost of credit for local companies. Loans approved from tomorrow onwards will enjoy the reduced insurance premium.

Spring Singapore said the two new enhancements will be valid for a year, and it will review the need for an extension thereafter.

Senior Minister of State for Trade and Industry S. Iswaran said the latest assistance scheme aims to lower the cost of credit for businesses as part of the overall package to address the business community's financing needs.

'The Government has continued to be pro-active in monitoring the situation and making improvements to our loan schemes,' said Mr Iswaran.

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