Mr Ian Teo (centre) and Mr Henry Lee (right) help clients secure banking loans

Day at the doctor's

“The moment we say we’re not their client, straight away they say ‘better not — I don’t know you well enough’,” complains the financial controller of a metalwork supplier, who has been trying to get a bridging loan.

He laments that banks have been cutting lending lines, increasing interest rates and even pulling them all together. “How can?” the financial controller asks.

Hitting walls with bank loan applications has been an increasingly common ailment in recent months for small and medium enterprises (SMEs).

Mr Lee — an ex-banker with 25 years of experience in the industry — might just be the “doctor” for them. He can be found at the Singapore Manufacturers’ Federation’s enterprise development centre (EDC) working part-time for a token fee.

This company is one of the many “patients” Mr Lee has met under SPRING’s recently-introduced Financial Facilitator Programme (FFP). Through this initiative, Mr Lee diagnoses a company’s health and then helps it make a loan application.

Unlike appointments with a neighbourhood doctor, these sessions normally last for more than an hour. They mostly start off with Mr Lee and EDC manager Ian Teo scouring through an SME’s financial and bank statements. Other necessary
documents include contracts, sales orders and corporate profiles.

Contrary to popular perception, he has found that most SMEs do not need help with paperwork for loan applications when they come knocking.

“It’s not so much the filling of forms. They have tried to apply for loans on their own and are not ignorant. The problem is that banks give them one-liner rejections.”

This is where Mr Lee can help. Through an ex-banker’s eyes, he can perhaps explain why a certain loan application was rejected.

When asked from his experience whether banks were being stingy with SME credit or rejected companies were just not creditworthy, Mr Lee said it was a mixed bag.

His advice: “SMEs should try to rely on themselves first and not borrow so much. Borrowing costs charged can be very high and will eat into their profits.”

In genuine cases, Mr Lee’s value comes in the form of helping them negotiate better deals with financial institutions. For example, it can be as simple as proposing to a bank that the company restructure its existing credit facilities using
a previously-hidden asset on it’s balance sheet as collateral.

The FFP has been in place since Jan 12 and is provided free to members of the five EDCs and the EnterpriseOne Business Information Service at the Singapore Business Federation.

Additional value-added services outside the programme scope are chargeable (see box).

Besides FFP, some private companies also provide similar loan facilitation
services. Oracle Capital, for example, charges clients about 2.5 per cent to 3.5 per cent of the loan approved for each successful case.

The director of a firm Today spoke to said the private company he used had pro-actively helped him source for contacts and even made personal calls to banks’ management for him.

Free services:
• Diagnosis of financial health;
• Advice on financial management
and financing options;
• Assistance on preparing
loan application

May be charged:
• Developing business
plan from scratch;
• Providing market
intelligence analysis