New OCBC support loans for SMEs
Singapore’s small and medium-sized enterprises (SMEs) more often resort to sustainable financing, with Oversea-Chinese Banking Corporation (OCBC) reporting a surge in sustainability-linked loans (SLLs) and other green financing solutions. In 2024, the bank extended over S$9 billion in sustainable financing to nearly 4,000 SMEs across the region, marking a more than 40% year-on-year increase from S$7 billion in 2023.
A shift in strategy drives OCBC’s push into SME sustainable financing. After years of working primarily with mid-to-large firms, the bank has expanded its focus to smaller firms that supply to or collaborate with these larger players. A key component of this expansion is SLLs, which require SMEs to meet sustainability performance targets in exchange for more favorable loan conditions. In 2024, OCBC issued more than 110 SLLs which is over four times the 24 issued in 2023 and a huge jump from just one issued in 2022. About 80% of these loans went to Singapore-based SMEs and the rest were distributed across Malaysia, Hong Kong and Indonesia. The leading sectors using the SLLs were manufacturing, services and construction. They are all industries that are actively seeking ways to reduce carbon footprints and enhance environmental, social and governance (ESG) practices.
This year, to help SMEs adopt sustainability measures and qualify for SLLs, OCBC partnered with Enterprise Singapore (EnterpriseSG) to launch the OCBC SME Start-ESG Programme. The program provides financial support for SMEs to assess their sustainability performance, access expert advice and improve ESG standards. EnterpriseSG covers up to 70% of eligible costs for sustainability assessments over three years, making it easier for SMEs to establish and track their green credentials.
OCBC has also joined the global sustainability platform EcoVadis and carbon management provider ESGpedia to conduct assessments under the program. EcoVadis evaluates businesses on environmental impact, labor and human rights, ethics and sustainable procurement, while ESGpedia focuses on greenhouse gas emissions. The assessments help SMEs set realistic sustainability goals, which are then used to determine their eligibility for SLLs. According to OCBC, the cost of these assessments is relatively affordable, with a three-year evaluation for small businesses costing around S$1,000 after grants equivalent to roughly S$30 per month.
Beyond sustainable financing, OCBC has been actively supporting SMEs through initiatives like the OCBC Women Unlimited Programme, launched in April 2024. The program waives processing fees on loans of up to S$100,000 for women-led startups under two years old. By the end of 2024, OCBC had extended around S$50 million in loans to nearly 300 women-owned businesses, reinforcing its commitment to diversity in entrepreneurship.
OCBC introduced the SME Energy Efficiency Assessment (SMEEA) tool for SMEs in the property sector in Hong Kong and Malaysia, expanding on its 2021 Singapore launch. The tool, developed in collaboration with Singapore’s Building and Construction Authority, enables businesses to evaluate energy performance within minutes and offers insights into green building technologies and potential financing options.
OCBC’s efforts to achieve sustainable financing align with broader global trends, as businesses face increasing pressure to adopt greener practices. By expanding accessibility to SLLs, collaborating with big partners, and rolling out initiatives such as the SME Energy Efficiency Assessment tool, the bank shows itself as a reliable partner and assistant for SMEs in Singapore.
