SME Association warns some Singapore firms could enter ‘life support mode' as US tariff pause nears end
The association also said that some firms are already shelving their expansion plans amid the crippling tariffs from the United States and the global economic slowdown.
ASME president Ang Yuit told CNA that if businesses are impacted, 'They will go on life saving and life support mode and minimise expenses.'
He also mentioned that although overall interest rates have dropped slightly, they are 'still not low' enough to make borrowing easy for SMEs. Because of this, 'Many are still a bit reluctant to apply for loan or working capital, unless they really have no choice,' he said.
CNA reported that Funding Societies, a non-bank lender that offers short-term financing of one to 12 months, reported a 15% decrease in loan requests from March to April. Several months before the dip, loan requests had been steadily going up.
While the non-bank lender does not expect a wave of bankruptcies, it noted that it's closely watching red flags.
Funding Societies CEO and co-founder Kelvin Teo said, 'Other bank and non-bank lenders have also started tightening within this segment preemptively and similarly for us, we also have additional scrutiny of borrowers that have supply chains that could potentially be impacted by selling to the U.S.,' adding that many SMEs are recalibrating their business strategy.
He said that in the short term, things are fine, but in the medium term, if cash flow starts to drop or liabilities begin to rise, they will have to take action.
ASME said companies need to start considering what might happen when the U.S. tariff pause ends and the likelihood of a shift in the global trading system. The association also called for more government support to help SMEs enter new markets and build a bigger supply chain network.
Last week, Deputy Prime Minister Gan Kim Yong said the government is in talks with banks to improve financing options for local companies after they raised concerns about delayed or cancelled orders and not receiving payment from their customers amid trade tensions. He added that if needed, new support schemes could be rolled out to help companies address their specific areas of concern. /TISG
Read also: Malaysia to strengthen anti-dumping law to protect local SMEs from China's flood of cheap goods
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