Frequently Asked Questions (FAQs)
Purpose of the loan
- What is the objective of the MicroCredit Business Scheme?
The MicroCredit Business Scheme aims to help eligible Singaporeans obtain financing for their small businesses, which is not available from mainstream financial institutions.
The loan can be used to start-up new small businesses or to expand existing small businesses that is managed and operated by the applicant.
- What types of businesses can be financed?
The MCBS Scheme is available for any legitimate business in Singapore. It can be used to set up a business at home, office, shop or factory. It can be used to finance stalls, for food or retail purposes.
The proposed business must meet legal and regulatory requirements. Therefore applicants must have a business registration and all necessary permits and licenses to operate the business.
- Which are the parties involved in MCBS?
MCBS is a joint initiative between POSB and SE Hub with the funding provided by TOTE Board.
- What is the role of POSB?
As the loan administrator, POSB will provide support on the loan structuring of MCBS and facilitate the flow of the funds, including loan disbursements and repayments.
- Will the Scheme provide 100% financing of the project?
The Scheme is flexible on the amount contributed by the entrepreneur. The actual amount that will be financed will depend on the evaluation of the project and the business risks.
Eligibility Criteria
- Who is eligible to apply for the loan?
The MCBS loan is available to any Singaporean aged 18 years old and above with an income of not more than $30,000 per annum. He/She must not have an adverse credit history and the business proposal must be sound.
- Are permanent residents eligible for the scheme?
Since this is still a pilot launch at the moment, only Singaporeans are eligible to apply for the loan. We will explore the possibility of extending to Permanent Residents in the near future.
- Is there an age restriction for loan applicants?
The applicant must be at least 18 years old and above to apply for the loan.
- Can a Company apply for the loan?
No, this loan is for small businesses owned by sole proprietors and partnerships only.
- In a Partnership set up, if any of the partners is a PR, can they still apply for the loan?
Whether the Partnership is eligible for the loan will be decided on a case by case basis.
- For Partnership, if any of the partners are earning more than $30,000, can they apply for the loan?
No
- Is a Partnership with more than 2 partners eligible to apply for the scheme?
No
Usage of the loan
- What can the loan be used for?
The loan can be used for any purpose associated with the starting up and operations of a new business including pre-operating expenses, working capital, equipment purchase and furnishing and fitting for the premises in order for the business to start. It can also be used for expansion of existing businesses.
- Can the applicant use the loan to pay debts or tide over other business contingencies?
No. The funds from the loan should be applied directly to the business and not be diverted to other uses. Similarly funds and profits derived from the business should go towards loan repayment first.
Details of the Loan scheme
- How much can an applicant apply for?
An applicant can apply for any amount from $3,000 to $50,000, depending on how much is needed for his/her business.
However, the MCBS Loan Committee will decide on the loan amount to be approved based on the Committee’s evaluation of the project’s requirements and viability.
- Is there a need for the applicant to pledge collateral for the loan?
The loan may be extended without collateral. This will be decided based on the merits of each application.
- What is the interest rate for this loan?
The interest rate for the loan will range from 8% to 12% per annum depending on period of repayment. These rates are considered reasonable for applicants who are not able to get a business loan from mainstream financial institutions.
- How long can the repayments of the loan be?
The maximum duration of the loan will be 10 years.
- Is there a minimum duration for the loan?
The minimum duration of the loan is 6 months.
- How is the loan repayment calculated?
Interest is computed on a monthly reducing basis and is based on 365 days regardless of leap year.
- What are the repayment terms?
The loan repayments will be on a fortnightly basis. The reason is that it is necessary for small businesses to be disciplined in their cash flow management and especially when their receipts and payments are in cash.
- When do the loan repayments start?
Generally the loan repayments should start after the disbursement of the loan. The Scheme however will consider requests for a deferment of repayments to allow the business to start up and for cash flows to stabilize. This will, however, be determined on the merits of each application.
- What are the indicative repayments?
Repayments of the loans will be fortnightly. The table below shows the indicative repayment amounts per $10,000 at various interest rates over different periods.
| Fortnightly Repayment Amount |
| Effective Interest Rate Per Annum |
Tenure (Year) |
per $10,000 |
| 8% |
1 |
$434.94 |
| 2 |
$226.14 |
| 3 |
$156.68 |
| 4 |
$122.06 |
| 5 |
$101.38 |
| 10% |
6 |
$92.63 |
| 7 |
$83.01 |
| 8 |
$75.87 |
| 12% |
9 |
$75.92 |
| 10 |
$71.74 |
- Can the applicant request for deferred loan repayment? For example, defer by 1 year or when revenues reach a certain pre-agreed level?
No. The maximum grace period for the deferment of loan repayments will be 6 months.
- Are there any penalties for early loan repayment?
No. We welcome early repayment.
Application of the loan
- How can an applicant go about applying for this loan?
Applicants can obtain the application form from any of the following:
- Any POSB Branch
- Download from POSB website at www.posb.com.sg/loans/mcbs
- Download from MCBS website at www.mcbs.com.sg
- MicroCredit Business Scheme (MCBS) programme office at InnoVillage@SP Reception, Singapore Polytechnic, 500 Dover Road, Singapore 139651
If the applicant is a member of the selected Voluntary Welfare Organisations (VWOs) / Self-Help Groups (SHGs), which participating in the scheme, the applicant can seek help from the VWOs/SHGs officer to print out the POSB application form and the MCBS fact sheet. The VWOs/SHGs officer would be able to brief the applicant about the scheme.
- Which are the VWOs/SHGs participating in MCBS?
The participating VWOs/SHGs are:
- CDAC
- MENDAKI Sense
- Pertapis
- AWARE
- WINGS
- SINDA
- If the applicants have some queries about the scheme, who can they contact?
Applicants can contact the MCBS programme office at 6774 4318 during office hours, Monday to Friday (9am to 6pm).
- Is there any help provided for completing the application form?
Applicant who has difficulties in completing the application form can contact the MCBS programme office at 6774 4318 to request for assistance during office hours, Monday to Fridays (9am to 6pm).
- Where do the applicants submit the application form to?
Applicants should mail the completed application form together with supporting documents to:
MicroCredit Business Scheme (MCBS) programme office
SE Hub Ltd, InnoVillage@SP
Singapore Polytechnic
500 Dover Road
Singapore 139651
Attn: to MCBS Programme Manager
- What are the consideration factors in determining the viability of a project?
We will study the business plan to establish that the plan is a viable one i.e. there is a demand for goods and services, competitive pricing, the project will produce a profit and cash flows for the owner to enable repayment of the loan. Another very important factor will be the business acumen and ability of the applicant. The applicant should have the drive, determination and skill necessary to execute the business plan and run the business successfully.
- When will the applicant know the outcome of his/her application?
The time taken for the processing of the loan will depend on the information provided by the applicant.
If the information provided is complete and of sufficient quality to enable the loan to be evaluated, then applicants should be able to know the outcome within one month.
Training
- Why does the approved applicant need to attend the training programme?
The training programme is designed to equip the applicant with the basic knowledge of business financial management such as managing cash flow, record keeping, concept of loans and repayments, concept of savings and the needs for building reserves, etc.
- What is the duration of the training programme?
Half a day
- Is the training programme compulsory?
Yes
- Who will pay for the training costs?
The training cost will be borne by the MCBS programme office.
Repayment
- What happens if loan applicant misses the fortnightly payments?
Late payment charges will apply to all late payments. The loan applicant should therefore make every effort to make the fortnightly payments on time.
- What are the exact late payment and penalty charges?
There will be a $20 late fee imposed for any overdue payments at the end of the month.
- What happens if the loan applicant’s business gets into difficulties and the applicant is not able to repay the loan according to schedule?
Our MCBS Facilitation officer will follow up with the applicant and ascertain the reasons for his/her difficulties. We can work out a repayment schedule for him/her to repay the loan over a longer period if necessary.
- What action will be taken if the business fails and the loan cannot be recovered?
The loans are provided on a commercial basis and therefore should be repaid. In case of a business failure, the applicant should make every effort to make repayment. The applicant is liable to enforcement actions by POSB.
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