In 2020, the data showed a shift in priorities where SMEs are no longer borrowing for expansion or to finance upcoming projects. Instead, funding is being sought for day-to-day operational and working capital needs to sustain their business.
We can also see a trend of larger companies requiring financing to continue their business. This is evidenced by an increase in the percentage of SME applicants with higher revenue in 2020 compared to 2019. It is likely that the companies with lower revenue or who are loss-making could not withstand the impact of the COVID-19 disruption and decided to either not want to cause further indebtedness by taking up more loan facilities or cease operations entirely.
Lastly, in line with expectations, there is a gradual increase in business loan applications on our platform from January to June 2020. As business conditions deteriorate and Singapore goes into circuit-breaker in April, where non-essential businesses are forced to close, many SMEs required additional working capital to pay existing overhead and manpower costs to keep their business operational. In July, pent-up demand after circuit-breaker briefly provided some relief before the demand for SME financing started picking up again in October.