With the oil and gas sector taking a huge hit, the default rates for business loans from Singapore’s three biggest banks (DBS,OCBC and UOB) have risen and are set to continue to rise. Bank profits have come under pressure and there has been a slump in the inter-bank rate. Dark clouds are roaming around in the economy in Singapore and skies don’t seem like they are going to brighten up anytime soon.
With the sluggish economy and bank loans falling for 11th consecutive months, the future of SME business loans from Banks does indeed look bleak. In an environment where SMEs find it hard to get financing from banks, they must look to alternate ways of funding. This is where P2P Lending can take it’s place in the financial environment in Singapore. With traditional business loans taking a dive, alternate ways of financing, i.e. Invoice Financing, can be looked upon as a saving grace for many SMEs that have been rejected for a traditional business loan by Banks.