COVID-19: support for FinTechs and start ups in Singapore

The COVID-19 pandemic continues to cause significant disruption to the global economy. In response, regulators worldwide have begun to unveil measures to help specific sectors weather and recover from the COVID-19 storm.

The Singaporean government has announced several initiatives focused on supporting FinTechs and the wider start up ecosystem in these unprecedented times.

MAS and Financial Industry Support Measures

On 31st March 2020, the Monetary Authority of Singapore (MAS), Singapore’s central bank and financial regulator, together with the Association of Banks in Singapore, the Life Insurance Association, the General Insurance Association, and the Finance Houses Association of Singapore, announced a package of measures to help ease the financial strain on SMEs caused by the COVID-19 pandemic. A second package was also announced on 30 April 2020.

The package will support SMEs with access to Bank Credit and Insurance Cover.

Defer Payment of Principal on Secured SME Loans

MAS announced that SMEs may opt to defer principal payments on their secured term loans up to 31 December 2020, subject to banks’ and finance companies’ assessment of the quality of the SMEs’ security. SMEs will also be able to extend the tenure of their loans by up to the corresponding principal deferment period if they wish.

Lower interest on SME Loans

MAS announced that banks and finance companies may apply for low-cost funding through a new MAS SGD Facility for loans granted under Enterprise Singapore’s SME Working Capital Loan scheme and Temporary Bridging Loan Programme. This initiative will potentially lower the interest rates charged to eligible SME borrowers.

Assistance with Insurance Premium Payment

MAS announced that corporates, including SMEs, holding general insurance policies that protect their business and property risks may apply to their insurer for instalment payment plans.

$125m package for Financial Institutions and FinTechs

On 8th April 2020, the MAS announced a S$125m (£70m) support package for financial institutions and FinTechs.

The package, funded by MAS’ Financial Sector Development Fund, focuses on three main areas:

• supporting workforce training and manpower costs;
• strengthening digitalisation and operational resilience; and
• enhancing FinTech firms’ access to digital platforms and tools.

Supporting workface training and manpower costs

MAS has introduced a new training grant to encourage financial institutions and FinTechs who, as a result of COVID-19, have experienced a decrease in business activity, to use this time to further the capabilities of their employees. Furthermore, MAS plans to increase the existing subsidisation level for attending Institute of Banking and Finance (IBF) accredited training courses to 90%. It will extend eligibility of the programme to include employees of FinTechs.

Finally, MAS will double the salary support incentive for firms hiring Singaporean graduates and career changers.

Strengthening digitalisation and operational resilience

MAS will introduce a special grant to support digitalisation in smaller financial institutions and FinTechs. The grant will be designed to support efforts that improve operational resilience, process efficiency, risk management and customer service. This includes upgrading existing systems to support remote working.

Enhancing FinTech firms’ access to digital platforms and tools.

MAS will provide all FinTech firms based in Singapore with six months access to a global online sandbox and marketplace, API Exchange (APIX).

Furthermore, MAS will work with the Singapore FinTech Association (SFA) to establish a new digital self-assessment framework for MAS’ outsourcing and TRM guidelines, hosted on APIX.

$6m grant to support Singapore FinTech firms

On 13 May 2020, the MAS, SFA, AMTD Group and AMTD Foundation (collectively, AMTD) announced the launch of a S$6m MAS-SFA-AMTD FinTech Solidarity Grant to support Singapore-based FinTech firms amid the challenging business climate caused by the COVID-19 pandemic.

The $6m grant comprises of two components:

• $1.5m Business Sustenance Grant (BSG); and
• $4.5m Business Growth Grant (BGG).

Business Sustenance Grant

As part of the BSG, eligible Singapore-based FinTech firms can receive a one-time grant for up to S$20,000 to cover day-to-day working capital expenditures, such as salaries and rental costs. The short-term assistance will help FinTech firms sustain their operations and retain their employees.

Business Growth Grant

As part of the BGG, eligible Singapore-based FinTech firms can receive up to S$40,000 for their first Proof of Concept (POC) with financial institutions on the APIX platform, and S$10,000 for each subsequent POC, subject to a total cap of $80,000 per firm for the entire duration of the grant. The BGG will also provide funding for the salaries of undergraduate interns, capped at S$1,000/month per intern

Comparison

The Singaporean package is the only scheme in a major economy to focus specifically on FinTech firms. Support schemes announced in France, Germany and the United Kingdom offer more broad support for start ups and innovative firms in the form of grant accelerations and bridge loans.

Find out more about selected FinTech legal and regulatory developments in the UK, EU and internationally in our May 2020 FinTech bulletin.

See our coronavirus (COVID-19) feature for more information generally on the possible legal implications of COVID-19.