SPRING, the Singaporean government agency responsible for helping enterprises grow, announced today it has launched a S$2 billion (US$1.45 billion) loan programme to support small and medium-sized enterprises (SMEs) over the next three years.
Named the SME Working Capital Loan Programme, the loans will be offered by 12 participating financial institutions (PFIs), and SMEs will be eligible to receive loans of up to S$300,000 (US$218,000).
SPRING will co-share 50 per cent of the loan default risk with PFIs.
The two most relevant loan options to the startup community are the ‘SME micro loans’ and ‘SME working capital loans’.
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For the working capital loan of up to S$300,000 (US$218,000), SMEs must be registered and operating in Singapore with a minimum of 30 per cent local shareholding in the company. Financially, the annual sales turnover cannot exceed S$100 million (US$72.5 million) and employ less than 200 people.
The repayment period is up to five years.
The Singapore registration and shareholder requirements are the same for a micro-loan (the loan is up to S$100,000 or US$72,500), but annual sales must be below S$1 million (US$725,000) in a company of less than 10 people. If the SME is part of a larger group, the same S$100 million (US$72.5 million) and 200 employee requirements of the working capital loan apply.
The repayment period is up to four years.
The other two options are a ‘SME equipment and factory loans’ and a ‘SME trade finance loans’. More details can be found here.
The list of PFIs is below:
- DBS Bank
- Malayan Banking Berhad
- Overseas-Chinese Banking Corporation.
- RHB Bank Berhad
- The Bank of East Asia
- The Hongkong and Shanghai Banking Corporation
- United Overseas Bank
- Standard Chartered Bank
- Hong Leong Finance
- Ethoz Capital
- IFS Capital
- ORIX Leasing Singapore
The loan programme is part of Singapore’s Budget 2016. According to the press release, it is designed as a measure to “address near-term concerns while encouraging business growth and restructuring activities”.
SPRING cited the Singapore Business Federation’s National Business Survey for 2015/2016 which found more local businesses are encountering financing issues. However, at the same time, the report said three out of every five SME owners were looking to raise capital to expand their company.
Ninety per cent of respondents in 2015 said ‘Cost Related Issues’ have affected their companies (which is actually a dip from 96 per cent in 2014).
“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,” said Singapore Business Federation CEO Ho Meng Kit
SPRING is Singapore’s national standards and accreditation body and also covers the consumer goods sector.