2020 was one of the toughest seasons for businesses locally, especially SMEs. The harsh global climate has forced businesses to rethink their existing strategies in order to remain relevant and agile. However, SMEs, you are not alone in the storm. The government is behind you at each step of the journey, enabling you to be small, but mighty and ever-resilient!
Based on a summary of the Fortitude Budget 2020, government financial schemes like the Temporary Bridging Loan Programme and the Enterprise Financing Scheme have rendered assistance that entailed $4.5b of loans.
Moreover, the government has harnessed the strength of the private sector, via joint-investment where $285m additional financing support has been set aside for promising start–ups.
Curious about whether such much-needed support for SMEs in Singapore is slated to continue in 2021? Good news, it is! From grants for SMEs to loan assistance and government measures, we’ve gathered 8 schemes in place to cushion the impact of COVID-19 and help companies get back on their feet in the year ahead.
Loans-related Government Support for SMEs:
1. Extended Support Scheme – Standardised (ESS-S)
Who is it for?
SMEs with cashflow difficulties, that are unable to resume paying their loan instalments in full by their deadlines and would need more time in doing so.
What is it?
SMEs may receive an extension for 80% of principal payments for fully secured term loans upon working with their respective bank or finance company, together with loans granted under Enterprise Singapore’s (ESG) Enhanced Working Capital Loan Scheme and Temporary Bridging Loan Programme.
The remaining 20% and the interest on the loan will be paid via instalments.
How long does the support last?
According to MAS, the period of deferment is determined by the sector in which the SME is from, and when the SME applies for the deferment.
SMEs functioning in Tier 1 and 2 sectors may obtain a deferment up to 30 June 2021. These 2 tiers include aviation and aerospace, tourism, hospitality, conventions and exhibitions, built environment, licensed food shops and food stalls, qualifying retail outlets, arts and entertainment, land transport, and marine and offshore.
On the other hand, SMEs in Tier 3A and 3B sectors may obtain a deferment up to 31 March 2021. Sectors in these tiers refer to all other sectors excluded from Tier 1 and Tier 2.
Any potential drawbacks?
Deferment of principal repayments may lead to increased overall interest costs. SMEs would have to weigh a balance between their need for temporal cashflow help and the incurment of added interest costs.
Is my SME eligible?
The SME should not have any loan payments that are more than 30 days past the due date. SMEs with overdue interest payments for loans previously granted principal moratorium will not be eligible.
How to apply?
SMEs are advised to reach out to their respective banks or finance companies as early as possible should they wish to apply for the ESS-S. In fact, the application round has been open since 2 November 2020.
Credits: The Association of Banks in Singapore
No tangible proof of being affected by COVID-19? Fret not, such documents aren’t needed. The good news is that applications are approved quickly in most situations, though requests may be denied in exceptional cases.
Application period?
From 2 November 2020 for SMEs in all sectors.
More related resources:
- MAS’ list of support for SMEs
- Standard Chartered Bank’s FAQ sheet on ESS-S
- The Association of Banks in Singapore’ Summary on ESS-S
2. One-year temporary bridging loan program for enterprises
Who is it for?
Business entities looking for working capital for business operations.
What is it?
As an initiative in the Soliditary Budget 2020, Eligible enterprises of all industry sectors will be able to borrow up to $5 million from participating financial institutions (PFIs) with the interest rate capped at 5% p.a.
For applications sent in before the cut-off date of 31 March 2021, the Government will co-share the borrowing risk by providing a 90% risk share on the loans.
Credits: Enterprise Singapore
How long does the support last?
Till 30 September 2021
Any potential drawbacks?
If loans are not paid, Participating Financial Institutions (PFIs) will follow their standard commercial recovery procedure prior to making a claim against Enterprise SG for the defaulted amount.
Is my SME eligible?
Only business entities that are registered and physically present in Singapore will be considered. Moreover, at least 30% of local equity must be held directly or indirectly by Singaporean(s) and/or Singapore PR(s).
How to apply?
Pre–application details and application form available here.
Application deadline?
31 March 2021
More related resources:
Enterprise Singapore‘s page on the temporary bridging loan programme
3. Loan Insurance Scheme
Who is it for?
Enterprises seeking to secure short-term trade financing for the following objectives:
- Inventory/ stock financing facility
- pre-delivery working capital
- Factoring invoice or accounts receivable discounting with recourse
- Overseas working capital loan
- Banker’s guarantee
What is it?
The Enhanced LIS helps SMEs secure short-term trade loans from Participating Financial Institutions (PTIs). Commercial insurers will insure the loans, co-sharing a loan default with the PFI in the event where loans are defaulted on.
Government assistance comes in supporting a portion of the insurance premium. As unveiled in the Supplementary Budget 2020, this support will be increased from 50% to 80% until 31 March 2021.
How long does the support last?
Till 31 March 2021
Any potential drawbacks?
No
Is my SME eligible?
Companies applying for the LIS should meet the following criteria:
- A Singapore-registered company physically located in Singapore
- Have 30% or more of its local equity held by Singaporean(s) and/or Singapore PR(s)
- Group revenue of max. S$100 million or have no more than 200 employees.
How to apply?
Interested enterprises may approach any of the following Participating Financial Institutions (PFI) to apply for trade loan backed LIS.
Credits: Enterprise Singapore
Applications must be submitted to any of the PFIs listed above, and will be managed directly by these institutions. The required documents will be advised by the individual PFIs as well. The success of each application is dependent on PFI’s discretion.
Application deadline?
31 March 2021
Government Measures to Support SMEs
4. Freezing of government fees
Who is it for?
All businesses
What is it?
Unveiled as a segment of the Resilience Budget, charges for government-provided services will be capped at its current rates, from 1 April 2020 to 31 March 2021.
For example, the LTA and STB licence charges, SFA food import permits, ACRA company registration charges, NEA inspection charges, and payments for certification of government documents will not be increased.
However, these exclude fees charged by non-government organisations.
How long does the support last?
From 1 April 2020 to 31 March 2021
Any potential drawbacks?
No
Is my SME eligible?
Yes
How to apply?
N.A
Application deadline?
N.A
More related resources:
Grants and Funding-related Government Support for SMEs
5. Market Readiness Assistance (MRA) Grant
Who is it for?
SMEs looking at growing their business overseas.
What is it?
SMEs will get an international boost with this grant for SMEs. According to Enterprise Singapore, benefits include:
- Support for 70% of eligible costs, max. S$100,000 per company per new market* from 1 April 2020 to 31 March 2023 for the following purposes:
- Market promotion overseas (max. at S$20,000)
- Business development overseas (max. at S$50,000)
- Setting up of market overseas (max. S$30,000)
- *enhancement* Previous limitation of two applications per company per year will be removed.
- Grant cap will be boosted from S$20k per year, to S$100k per new country over three years.
Companies may only apply for support for one activity in a single overseas market (e.g. market entry, or participation in a trade fair) per application.
How long does the support last?
The MRA Grant support level of up to 70% will be extended until 31 Mar 2023.
From 1 November 2020 to 30 September 2021, the maximum support level will be increased from 70% to 80%.
Any potential drawbacks?
No
Is my SME eligible?
Companies should meet the following criteria:
- Singapore-registered or incorporated business
- Fulfil the new market entry criteria, i.e. target overseas country whereby the applicant has S$100,000 or less in overseas sales in each of the previous three years
- Possess a min. of 30% local shareholding
- S$100 million or less in Group Annual Sales Turnover; OR Company’s Group Employment Size of max. 200 employees
Refer here to their full list of supportable activities.
How to apply?
Please apply through the Business Grants Portal.
Application deadline?
Applications must be made at least 6 months before the commencement of the project or activity.
More related resources:
Enterprise Singapore’s page about market readiness assistance grant
6. The Mergers & Acquisitions (M&A) Allowance
Who is it for?
SMEs expanding their business through mergers or acquisitions, or companies that are acquiring the shares of another company.
What is it?
An M&A allowance will be given to a company that buys over the ordinary shares of another company between 1 Apr 2010 to 31 Dec 2025. This allowance will be disbursed over five years and cannot be deferred.
Companies must meet specified conditions to qualify for M&A allowance for the yearly assessment (YA) throughout the five-year write-down period.
How long does the support last?
For qualifying share acquisitions completed before 31 Dec 2025
Any potential drawbacks?
No
Is my SME eligible?
Please check the full qualifying conditions of the parties involved- the target company, acquiring companies and acquiring subsidiaries.
How to apply?
The acquiring company may apply for the M&A allowance upon lodging its income tax return for the YA in the same period basis as that of the qualifying share acquisition.
According to IRAS, “where the acquiring company elects to consolidate acquisitions of a target’s ordinary shares over the 12-month look-back period, it must make such an election in its tax computation at the time of lodgement of its income tax return for the YA relating to the basis period in which the 50% or 75% as the case may be, is crossed.”
Application deadline?
N.A
7. Financing support for promising start-ups
Who is it for?
SMEs seeking financial assistance and investments
What is it?
A Special Situation Fund of S$285 million will be set up for startups to provide financial support. This initiative is a partnership between EDBI, the corporate investment arm of the Economic Development Board, and SEEDS Capital, the investment arm of Enterprise Singapore.
Under this scheme, EDBI and SEEDS Capital work closely with private sector co-investors to invest in chosen startups. The scheme is part of the Fortitude Budget, and will provide time-limited funding assistance to promising startups to maintain their growth despite the impact of COVID-19.
How long does the support last?
The scheme will end when the funds are fully committed or by 31 October 2021.
Any potential drawbacks?
No
Is my SME eligible?
The company must be registered as a Private Limited company with HQ and key value-added activities in Singapore. It should also have strategic strengths such as tech and innovation, and sustainable competitive advantages. Applications will be assessed individually.
Keen to know about the key business attributes they are looking for? Refer to this press release for the full details.
How to apply?
Early-stage startups may submit their interest for the funding via ssfs@enterprisesg.gov.sg, while late-stage startups may apply via ssfs@edbi.com.
Please refer to this press release for the submission documents needed.
Application deadline?
N.A
Training-related Government Support for SMEs:
8.The Enterprise Leadership for Transformation (ELT)
*application closing end Jan 2021!*
Who is it for?
Business leaders with the vision and determination to transform their business, and are looking to grow as SME business leaders.
What is it?
A one-year programme that trains business leaders of promising SMEs to hone their business growth abilities.
It is managed by an organisation of partners including institutes of higher learning, financial institutions and industry experts who are well-versed with the specific challenges encountered by SMEs.
Eligible enterprises can qualify for up to 90% discount on programme fees of approximately S$30k. For Singaporeans and PRs, this means a sum of about $930 to $3630 for the entire course.
What’s more, upon completion of the programme, participants will be invited to networking events and access to resources from industry experts from top universities in Singapore, opening new vistas of opportunities for their businesses.
How long does the support last?
The training will be for 1 year.
Any potential drawbacks?
No
Is my SME eligible?
- Local business
- Possess shareholding of min. 30%
- Latest fiscal year revenue of min. S$5 Million
- One or more participants to be a Founder or Successor (FOS) of the business
How to apply?
Access the application form here, and check out the full list of documents needed for application.
Application deadline?
31 January 2021 or when classes are filled.
Find the most updated information on grants, loans and insurance, tax incentives at Enterprise Singapore’s page.
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