By Francis Chan

CITIBANK Singapore is among a group of banks that Spring Singapore is said to be wooing to hand out government-backed loans to firms gasping for funding during the credit crunch.

Citi has already made it clear that it wants a role in administering the various assistance schemes - some announced last November, and others last month in the Budget.

The exact details of Citi's application cannot be determined, but a bank spokesman confirmed that it 'will be one of the banks which will be expected to apply to Spring' to help administer the loans.

More banks taking part means more options for businesses - both big and small - when they apply for government-backed loans.

These loans usually entail the Government taking on a greater part of the risk of some existing financing schemes - in some cases bearing up to 80 per cent - to encourage financial institutions to keep lending.

At present, 14 financial institutions administer various loan schemes aimed at helping ease credit flow to companies.

Spring Singapore said all foreign and local lenders need its approval before they can handle the loans. The enterprise agency will also get input from the Monetary Authority of Singapore (MAS) before approving applications.

The issue of credit, or the lack of it, has taken centre stage during the financial crisis, with lenders accused of cutting back on lending.

In the last quarter of 2008 - when the crisis intensified - businesses, especially small and medium-sized enterprises (SMEs) in need of working capital and other forms of credit, complained that lenders were becoming increasingly risk-averse.

But government measures that took effect on Dec 1 and Feb 1 to unlock the credit flow seem to be easing some of the pain for firms.

Figures released by Spring Singapore on Wednesday show that government-backed lending soared last month and in the first few days of this month.

The number of loans approved jumped by 82 per cent - from 226 to 411 - between last December and last month. And amounts were up 77 per cent, from $80.4 million to $142.2 million over the same period.

The government-backed schemes on offer include the Loan Insurance Scheme (LIS), the Local Enterprise Finance Scheme (LEFS) and the Micro Loan Programme.

There are also recently introduced or enhanced schemes like the Bridging Loan Programme and the LIS+, along with the $5.8 billion Special Risk-sharing Initiative (SRI) that came into effect on Feb 1.

Spring is believed to be developing another off-Budget initiative that will help graduates get attachments in Singapore-based companies.

The scheme will allow the firms - especially SMEs - to tap talent from the graduate community.

The Straits Times understands that the initiative will offer fresh graduates - especially those struggling to find work - a chance to be attached to appropriate firms.

Instead of a salary, they will be given a stipend that will be subsidised by the Government under the recently announced $200 million Build programme.

The Build - Business Upgrading Initiatives for Long-Term Development - programme was introduced to increase funding assistance for firms applying to Spring's capability development programmes.

For individual SMEs, Spring will increase funding support from 50 to 70 per cent. It will also raise cash backing for industry-level projects from 70 to 80 per cent under the umbrella of an existing scheme - the Local Enterprise and Association Development (Lead) programme.

The funding can be used for a range of projects, including upgrading IT systems, designing new products or devising new branding. It can also possibly apply to the new graduate attachment programme.

Spring said the graduate attachment programme is still being developed but it will be funded through the Build programme and not from Spring's own reserves as stated in media reports yesterday.

More details of the graduate programme are expected by next month.

This article was first published in The Straits Times.