Local SMEs will have greater access to financing starting 1 June 2016 through the SME Working Capital Loan. Administered by SPRING Singapore, the programme addresses SMEs’ cash flow concerns and growth financing needs through unsecured working capital loans.
SME Working Capital Loans will be offered by 12 participating financial institutions (PFIs). SPRING Singapore will co-share 50% of loan default risks with PFIs and SMEs can apply for unsecured term loans of up to S$300,000 each. The scheme is expected to catalyse more than S$2 billion of loans for SMEs over the three-year period.
The SME Working Capital Loan was introduced at Budget 2016 as one of the measures to address near-term concerns while encouraging business growth and restructuring activities. The programme provides an additional financing channel to support viable SMEs with larger working capital needs. These companies may have cash flow concerns or wish to continue growing their business in the slowing economy.
Based on Singapore Business Federation’s (SBF) National Business Survey 2015/2016 findings, more local enterprises are facing financing issues, such as rising cost of bank loans, and difficulties in renewing financing. At the same time, the survey found that close to three in five companies have plans to increase their investment for business expansion this year, in areas such as employee training and development as well as technology deployment for productivity improvements.
Mr Ho Meng Kit, Chief Executive Officer of the SBF, said, “More than half of the companies polled in SBF’s National Business Survey 2015/16 faced financing issues. Moreover, SMEs, by virtue of their scale, often face obstacles obtaining credit from banks and financial institutions. Despite their financing challenges, SMEs are keen to expand and restructure. The SME Working Capital Loan offers a welcome relief for some of these SMEs, enabling them to address their immediate financial concerns as they look for growth opportunities.”
“The SME Working Capital Loan is introduced to enhance financing support for enterprises and improve credit availability in light of the current economic situation. The objective is to help viable SMEs continue meeting their cash flow needs, and stay the course in their upgrading journey,” explained Ms Chew Mok Lee, Assistant Chief Executive of SPRING Singapore (pix).
“We will continue to monitor SMEs’ financing needs vis-à-vis economic conditions, and adjust our schemes to address situational changes.
To be eligible for the SME Working Capital Loan programme, SMEs must be registered and operating in Singapore, have a minimum of 30% local shareholding, and a group annual sales turnover of not more than S$100 million or group employment size of not more than 200 employees. Interested SMEs can visit www.spring.gov.sg/loan to find out more about the programme, and approach the respective PFIs to apply for such loans.