RETAIL BANKING | Staff Reporter, Singapore

Everything you need to know about Maybank Singapore's BizMortgage Plus for SMEs

It offers financing of up to 120% of the value of the SME's property.

With cashflow and financing being the top concerns of small and medium enterprises in Singapore, Maybank launched BizMortgage Plus, an initiative that offers financing of up to 120% of the value of the SME's completed, owner-occupied commercial and industrial property (CIP). BizMortgage Plus is the first banking product in Singapore to offer such a high level of working capital financing for the SME segment.

Many SMEs are grappling with the economic slowdown and facing heavier cash flow issues such as tightening of credit access from suppliers or delayed payment from customers. “This product’s holistic bundle of offerings addresses the diverse short to long term cash flow needs of SMEs, and can be a viable solution to help ease the financial burden on business owners,” said Mr Choong Wai Hong, Head, Community Financial Services, Maybank Singapore.

The product was launched in March 2016, but given the product’s new bundled deal, Choong anticipates BizMortgage Plus to contribute around one-third of the bank's total business property financing in 2017.

Who can avail of this new product and how does it work?

Eligible companies are those that are locally incorporated, established for at least two years and with a turnover of up to S$20 million.

These companies will be offered a bundled deal comprising a CIP loan and working capital financing options – a term loan, an overdraft, trade facilities or business credit card. They can choose to take up any combination of the above or all the options, depending on their business needs.

For example, a company which has just purchased a new office unit can choose to take a CIP loan of 80% of the property’s value, and the remaining 40% can be in the form of a term loan, say for renovation and moving expenses.

Another company which has fully paid for its business property can, for instance, choose to take 80% of the property’s value in the form of trade facilities for its international and domestic trade transactions, and 40% as a revolving facility (i.e. overdraft) to meet its daily business needs. The trade facilities can be used for importing and exporting, to bridge cashflow needs and eliminate risk of late payment to trading partners.

In addition, SMEs that take up the CIP loan can choose the Choice Instalment Scheme and pay only half of their usual monthly repayment for the first 12 months. Companies taking the term loan option can also enjoy an extended loan tenure of up to 10 years.

What are the other features of BizMortgage Plus?

Based on the 2016 SME Development Survey by DP Information Group, the cost of financing has emerged as the fourth biggest cost issue among SMEs. Companies which have an outstanding business property loan with another bank can also consider refinancing their loan with BizMortgage Plus, as they can benefit from preferential interest rates.

For example, an SME with a S$1 million business property, who decides to take up 80% CIP financing repayable over a 20-year tenure and allocate the remaining 40% to a five-year term loan, will enjoy total interest savings of up to S$44,000 over three years. This is in comparison to signing up for these two financing products separately from Maybank.

One company which has signed up for BizMortgage Plus is Yes Air-Con Engineering Pte Ltd which specialises in installation, plumbing and related maintenance services for airconditioning systems. “It made more financial sense to buy an office space as the property instalment is half that of the monthly rental. By signing up for BizMortgage Plus, not only did I get interest savings from taking on the CIP loan, I also got access to additional working capital to fund new projects," said Mr Yeak Ai Li, Managing Director of Yes Air-Con Engineering Pte Ltd. 

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