The Monetary Authority of Singapore (MAS) has opted to relax current rules regarding how finance companies provide loans to SMEs and startups.

At the moment, a finance company faces a cap of 10% of capital funds for total uncollateralised lending, with a S$5000 maximum to a single borrower.

The MAS intends to gradually relax these limits, raising the cap to 25% of capital funds, while a single borrower can obtain a loan of up to 0.5% of total capital funds.

There are only three finance companies currently licensed by MAS to take deposits and loans â€" Hong Leong Finance, Sing Investments and SIngapura Finance â€" with combined assets amounting to S$16 billion.

The relaxation of the prevailing regulations was in direct response to the Committee on the Future Economy. The new limits would allow finance companies to provide up to S$550 million in uncollateralised loans, according to The Business Times.

The relaxation of MAS rules are regarded as a welcome move, as it would grant SMEs and startups easier access to loans without the need to offer collateral. It makes it far easier for entrepreneurs to secure financing, whilst also driving the initiative to make Singapore an epicentre of innovative technology.

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