Keeping our firms and workforce competitive

Access to Funding – Enterprise

Creating sources of funding for SMEs

With Budget 2019, eight existing SME financing schemes will be streamlined into a single Enterprise Financing Scheme (EFS).

The SME Working Capital Loan scheme, introduced in Budget 2016, will be extended for another two years till 31 March 2021 and also subsumed under the EFS with the Government taking in up to 70% of the risk for bank loans compared to the current 50%.

The Government will also set aside an additional $100 million for the SME Co-Investment Fund III to continue its support for firms in their efforts to scale up and internationalise.

Making funds readily available

Start-ups can only thrive when they scale up. However, SMEs generally have more difficulty obtaining bank financing or securing investment to scale.

The initiatives aim to release the funding pressure points:

  • The EFS offers SMEs easier access to financing for different stages of their growth, and is spread over six financing areas: working capital, fixed assets, trade, venture debt, mergers and acquisitions, and project financing. The Government has also enhanced the support given to younger SMEs that generally have more difficulty obtaining bank financing due to the lack of track record.
  • The SME Co-Investment Fund III is an additional investment to further catalyse active and patient growth capital for Singapore-based SMEs that are ready to scale up and internationalise.

Gaining access to more funds

Gaining access to more funds

The extension of the SME Working Capital Loan scheme will help address SMEs’ near term cash flow concerns and growth financing needs. At the same time, the enhanced Government support of taking on up to 70% of the credit risks on bank loans to companies less than five years old will also help catalyse start-ups with innovative ideas which may need a longer gestation period.

With the additional investment commitment made by the Government under SME Co-Investment Fund III, more Singapore-based SMEs can gain access to private capital as their businesses grow and position themselves to venture abroad.

Getting money might be easier

With the streamlining of the various financing schemes, SMEs should expect simpler application processes and easier access to loans.

Some fine tuning might be needed

While the extension of the SME Working Capital Loan scheme should also be welcomed by the SMEs, the two-year extension may not be sufficient as cash flow tends to be an ongoing concern for SMEs. Younger companies should identify their funding needs early in order to benefit from the scheme, considering that the scheme is subject to review by 31 March 2021.

Limiting private capital investments

The additional commitment by the Government will certainly help more SMEs gain access to both Government and private funding in their growth expansion. However, as the investment in Fund III is smaller than investments in previous Funds I and II, this would limit opportunities for the existing SMEs to benefit from such a programme. Local SMEs should review their business plans and funding needs to see how they can capitalise on this third co-investment fund.


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