SME Government Supported Financing Schemes to consider


SMEs in Singapore, much like most businesses right now, are struggling due to the ongoing pandemic. The most common challenges they face include high rental costs, a tight workforce pool, and access to sme grants Singapore bank financing.

Singapore’s GDP growth for 2020 was just at5.4%. The country is also being weighed down by the US-China trade war back in 2019, along with theCOVID-19 outbreak. As one of the most expensive citiesglobally to conduct business in, SMEs constantly need to tackle high overheads and costs. Thankfully, there is a myriad of government grant options for sme to tap into to aid in alleviating working capital and cash flow pressure.

SMEs make up 99% of all enterprises in Singapore, which contributes almost 50% of GDP and employs about 70% of the workforce. Because of resources constraint, information and time, some small business owners are not aware of the various grants and financing schemes available to them.

Most government-assisted financing schemes for SMEs are administered by Enterprise Singapore, which merged both Spring Singapore and IE Singapore to focus on SMEs’ growth.

Most SME grants Singapore are in the form of term loans. The grant has a form of risk-sharing factor between the government and participating financial institutions. This assists in spurring credit lending to SMEs, which are generally considered high-risk segments to banks because of lack of credit information and higher default rates.

Securing a business loan in Singapore is rarely easy for most SMEs, so financing schemes help improveapproval chances.With the SG government’s risk-sharing element, participating banks might also offer lower interest rates on SME loans since the risk of default is now shared.

Government grants for SME will also helpboost funding liquidity in the banking credit ecosystem since most banks will typically slow down lending to ease risks during a downturn.

Below are thedifferent government financing schemes SMEs can utilize to expand their business:

SME Working Capital Loan. The SME Working Capital Loan is a government-assisted financing loan under the Enterprise Financing Scheme (EFS-WCL). The enhanced scheme in the Solidarity Budget 2020 helps SMEs access financing till March 2021.

Loan Insurance Scheme (LIS). Enterprises can secure short-term trade financing loans via the Loan Insurance Scheme (LIS) from Participating Financial Institutions (PFI).

Enterprise Financing Scheme (EFS). With effect from 29 Oct 2019, Enterprise Singapore’s existing financing schemes will be streamlined into one umbrella scheme known as the Enterprise Financing Scheme (EFS). EFS will enable Singapore enterprises to access financing more readily throughout their various stages of growth.

Small business owners should educate themselves on SME financing nuances and the most appropriate sme grants Singapore offers before full commitment. Financing is not rocket science, but in many cases,SME owners are too time-starved to learn more about the available options in the market.

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Small business loans can mean a big deal to companies looking for hassle-free funding, especially for businesses impacted by the COVID-19 outbreak. As part of the government’s plan to ease business budget constraints, banks offer up to S$200,000 as part of the new relief assistance with the Digital Business Loan, supported by the Resilience Budget 2020.

Banks like DBS offers this loan to ease your cash flow pressures with low-interest rates, a fuss-free online application process with no submission of financials,and a waiver of your processing fee. SMEs can consider utilizing any of the available government-supported financing schemes listed above as part of the overall financing strategy and growth avenues.

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