Creditworthiness: People cross a bridge with the central business district of Singapore in the background. OCBC says having a more complete view of a customer’s risk exposure and business portfolio allows it to offer better support. — Bloomberg
SINGAPORE: OCBC Bank is topping up its loan pot to S$5bil (US$4bil) from S$1.5bil for entrepreneurs who own multiple small, early-stage businesses, and extending its cash line beyond Singapore to Malaysia, Indonesia and Hong Kong.
The borrowing scheme for serial entrepreneurs is unique for its creditworthiness assessment of individuals and the collective strength of their companies, rather than the individual businesses they run.
The bank also assigns a dedicated manager and provides advisory services to these business owners.
OCBC aims to lend the S$5bil to this segment by 2028. This includes the S$1.5bil that has been disbursed to more than 1,800 business founders in Singapore and Malaysia since the bank pioneered the plan in 2019.
OCBC executives said in a media briefing that despite the uncertain trade environment, the bank expects business owners to forge ahead.
The bank started offering the coverage to Malaysian entrepreneurs in early July after a nine-month pilot, and plans to do so in Hong Kong later in 2025, to be followed by Indonesia.
Anna Chang, the bank’s head of middle market and services, global commercial banking, said that based on the bank’s portfolio, firms led by serial entrepreneurs are 30% less likely to default than those run by single-venture owners.
Only companies in which the so-called “key man” has a majority stake are taken into assessment for financing, she said.
Loan guarantees are borne only by the entity taking the loan, and tenures could be four to 18 years, depending on whether the loans are collateralised.
One in three new businesses incorporated in Singapore belongs to an entrepreneur with at least one business, according to OCBC.
In Malaysia, serial entrepreneurs account for almost half of the small business clientele, said the bank.
OCBC is also offering sector-specific solutions, such as healthcare, education and food and beverage, which tend to draw serial entrepreneurs.
Adam Piperdy, who has nine businesses in the events sector under the Unearthed Group, said: “I’ve been doing business for about 15 years, and we always repeat the same story to the same, or multiple, relationship managers just to get financing.
“There was a lot of time spent going to each entity to approve transactions and all that.”
With the bank’s support, Piperdy’s group, which runs the Orchard Road Christmas Festival, has grown more than 30% in revenue each year in the last two years, and seen a nine-fold increase from 2020 to 2024 in the number of events it manages yearly.
He plans to expand to Malaysia, Thailand, Vietnam and Indonesia in the next 12 months.
For Westpoint Transit’s director Lionel Lee, efforts to upgrade the bus fleet in his family’s five companies across the logistics and transport sectors had hit snags previously.
The second-generation leader in the business said: “A lot of times we were told, ‘You guys have not taken any loan in many decades, how are you going to be able to finance it? Show us some records’. It was frustrating.”
Then he met the OCBC team, which showed more interest in his business plans.
“That provided the foundation financially for us to acquire 30 buses last year and, at the same time, allowed us to expand our hiring of drivers,” he said.
Autonomous vehicles are now on his radar.
OCBC’s head of global commercial banking, Linus Goh, said having a more complete view of a customer’s risk exposure and business portfolio allows the bank to offer better support. It also deepens trust.
“When you have the whole relationship together, I think the key man tends to be very upfront,” he added. — The Straits Times/ANN
