Navigating the Pandemic: Ways for SMEs to brace for a safe re-opening
Running an SME has never been a walk in a park. The COVID-19 pandemic, Circuit Breakers and other lockdown measures are restricting SMEs’ business operations and disrupting supply chains. Many SMEs are facing greater challenges than ever before.
While having to cope with this demand side shock to their operations, the “new normal” also requires companies to operate with unfamiliar models, as an outcome of the safe distancing measures (for staff and customers), or in some cases due to a rebalanced work force that partly telecommutes. All these are more challenging for smaller firms, which can aggravate a delicate cash flow situation.
“One other key challenge SMEs face is cash flow and its unpredictability,” says Marc Leong, Head of SME Banking, Maybank Singapore. “This pandemic and similar crisis situations tend to constrict revenue inflows, while fixed overhead costs like rent, payroll and utilities still have to be paid. This cash flow gap cripples SMEs’ operability and sustainability.”
Singapore Government extends helping hand to SMEs
The Singapore Government has already taken the first step towards supporting SME business owners and local workers.
For a start, the government is spending S$20.6 billion to co-fund 75% of the first S$4,600 of monthly wages for all 1.9 million local workers in the months of April and May, and 50% to 75% for workers in the food services, aviation and tourism sectors for the remaining qualifying months.
Eligible self-employed persons, which include many SME owners, will receive 3 quarterly cash pay-outs of S$3000 starting from May.
The government also waived foreign worker levies for April and May, and extended a S$1,500 rebate for each eligible worker. Corporate income tax payments have also been deferred for three months, while some businesses get to enjoy rental waivers of up to 3 months.
Filling in the gaps
The government has also set aside S$20 billion as loan capital to further extend credit to SMEs, yet they are well aware that they cannot do this on their own, as many SMEs are likely to fall through the cracks.
“SMEs constitute 99% of Singapore businesses, contributing almost 50% of the country’s GDP and employing 65% of our work force,” says Mr Leong. “This explains the intensity of the broad based financial and economic relief measures announced to help this business segment. But, even after 3 rounds of budget measures, Monetary Authority of Singapore (MAS) is still working extensively with financial institutions like Maybank to cast a wider net,” he adds.
As Asia’s leading financial institution more than 60 years, Maybank is doing its part to help fill in the gaps for SMEs with the Maybank COVID-19 Relief Package. The relief package aims to ease SMEs financial burden especially in these trying times.
Under the relief package, existing SMEs customers are able to apply for the SME Loan Repayment Relief, to defer their principal and interest repayments on their secured term loans, with effect from 6 April 2020 to 31 December 2020, and enjoy a corresponding extension of their loan term. The relief is available to SME customers with loan accounts which are not more than 90 days past due as of 6 April 2020.
SMEs should also be aware of the Enhanced Enterprise Financing Scheme – SME Working Capital Loan (EFS-WCL), which has a maximum loan quantum of S$1 million, as well as the Temporary Bridging Loan Programme (TBLP), with a maximum loan quantum of S$5 million and an interest cap of 5% p.a. Customers for both government assisted loan programmes also have the option to apply for up to 1 year deferral of principal repayment to help manage their debt, subject to assessment.
Bracing for Re-opening
It is also important that SME owners start to look beyond the immediate problems, to brace for re-opening and be ready for a new phase of growth.
“As part of our client-centric approach, we have always engaged our customers to plan early. Whether it is for their business process improvements, cash management, or financing, it is essential for them to think about optimising their banking and financial solutions, and be better prepared for future growth opportunities and any potential challenges,” says Mr Leong.
Here are 4 ways SME owners can consider working in the new normal.
Expanding their marketplace
SME owners can take this opportunity to invest in research and development, explore new business opportunities and additional products and services. These could lead to additional revenue streams in future.
Increasing revenue streams with effective cost management practices
SME owners must improve cost management practices, while exploring opportunities to optimise and grow revenue. When it comes to banking, SME owners can consider banking solutions that help maximise their revenue. Some accounts, like Maybank’s Flexibiz account, do not require a minimum balance and do not have any servicing fees, leading to cost savings.
Adopting new payment collection systems
The current pandemic has highlighted the importance of contactless payments and galvanised many Singaporeans to start using them in their daily lives, so it will be timely for SMEs to adopt e-payment solutions like FavePay, GrabPay and PayNow Corporate for their business operations.
Growing the business with new technology
During this period of business disruption, SME owners can take the opportunity to improve their operational efficiency with the help of technology, including solutions for accounting, digital transactions, cybersecurity, and digital marketing.
Maybank – Humanising Financial Services since 1960
Over the last 60 years, Maybank has established itself as a one-stop provider of comprehensive business solutions for SMEs, and is committed to helping SMEs grow their business even in tough times.
“With our 60 years of expertise and heritage, Maybank is dedicated to helping our customers overcome and navigate through these challenging times,” Mr Leong says.
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