Getting a loan to start a business will soon be easier than ever before. About US$300 million will be made available in January under a pioneering lending scheme that allows small businesses to tap loans from the same capital markets as the big companies.
DBS Bank will bundle the loans of businesses together and turn the portfolio into tradeable bonds that will be sold to institutional investors.A wide range of small-to-medium enterprises (SMEs) and start-ups, even those with no track record, can then get access to a new source of funds.
With this scheme from Spring Singapore, the former Productivity and Standards Board, investors could get a stream of income from the bonds at an attractive rate. Usually, only large corporations can raise funds in this manner, by taking their debt to the capital market of cash-rich institutions and selling it to them as bonds.
