Low income Singaporeans have long struggled to obtain low income loans to start a small business.

A new low income loan scheme is offering competitive low income loans of $5,000 to $50,000 in what is believed to be the widest-ranging low income loan scheme ever directed at this low income group- who rarely have any collateral to offer. Under the low income loan scheme, Singaporeans aged at least 18 with a low income of less than $30,000 a year- even the unemployed- can apply for these low income loans without collateral. Interest rates for these loan income loan start from 8 per cent per annum and above, well below the 12 per cent to 18 per cent charged for unsecured loans by banks, and the rates on credit card debt which can go up to 24 per cent.

The scheme is called the MicroCredit Business Scheme (MCBS) and will start operating on 18 Nov 2011. These Singaporeans generally cannot obtain low income loans through other channels. With few other options to get unsecured low income loans, many people loan from friends or family to set up businesses.

The low income loans may be used for a range enterprises including barbers and tailors. Such low income loans would otherwise be unobtainable from traditional banking sources. Low income loans can be for short term initiatives such as selling pastries during festive periods or longer-term plans like starting a shop. A key part of the application will be the submission of a business plan. Applicants will assessed on the plan, their character, ability and desire to be more self-reliant.

Successful applicants need to attend a free training programme, on topics such as cash flow and record keeping skills. Officers will help to ensure timely repayments of low income loans and provide other assistance regarding the business,

Bank will administer the low income loans, arranging the flow of funds and providing the loan income loan structure.

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