Assistance to SMEs-Singapore

SME Loan Securitisation Project

Traditionally, only larger corporations are able to raise funds through bonds or other securities. Individually, Small and Medium Enterprises (SMEs) may not be seen as attractive credits. But a well-diversified portfolio of SMEs will collectively be more appealing to investors. By pooling together a portfolio of SME credits, the capital markets can potentially be a viable avenue for SMEs to raise funds.

The Government has hence been working on a SME Loan Securitisation project. DBS Bank has been appointed to structure and underwrite the transaction and possibly launch it in January 2005. The pilot programme will facilitate $300m of loans for SMEs.

Loan Insurance Scheme

The Government introduced a pilot Loan Insurance Scheme (LIS) to complement the longstanding Local Enterprise Finance Scheme (LEFS). Under this scheme, participating financial institutions (PFIs) were allowed to tailor interest rates according to the risk-profile of borrowers. This enabled PFIs to consider lending to 'higher-risk' SMEs, such as those with no collateral to pledge.

The pilot phase of the LIS was well received by SMEs and PFIs. More than $25m of loans were facilitated. New loan facilities like stock financing and standby letters of credit are now available to SMEs. In addition, larger enterprises will be able to avail themselves of loans for internationalization purposes. It is hoped that $300 million of loans to SMEs and internationalizing enterprises will be facilitated over 5 years.

Start-up Enterprise Development Scheme (SEEDS)

SEEDS was launched in 2001 to provide matching equity funding for innovative high-tech start-ups. More than 100 start-up companies have received SEEDS funding. Based on public feedback, this scheme will now be extended to non-technology start-ups as well.

Local Enterprise Technical Assistance Scheme (LETAS)

SMEs also need to upgrade their capabilities to raise productivity levels and compete successfully. Since 1982, the LETAS scheme has supported SMEs' upgrading projects, with more than $500 million of grants being disbursed since the scheme's inception. While the scheme has served its purpose, it needs to be fine-tuned in the face of the changing economic climate. There will be a shift away from the one-size-fits-all approach to providing more customised assistance to SMEs depending on their maturity and needs. Three-tiers of assistance: broad-based, focused and enhanced will be introduced.

Broad-Based Assistance

Some SMEs, especially the start-ups and smaller enterprises, only need some professional advice to help them deal with basic issues such as financial management or business planning. These SMEs can receive broad-based assistance through Enterprise Development Centres, which SPRING will jointly establish with key industry associations and chambers of commerce. The Centres will provide walk-in diagnostic and advisory services to help SMEs with their day-to-day business issues and basic upgrading needs. SPRING will fund part of the set-up and first-year operation costs of these centres.

Focused Assistance

More mature SMEs may have more complex upgrading needs that require the engagement of external consultants. Focused assistance will be provided to this group through co-funding of projects. To qualify for funding, these projects must deliver significant and tangible benefits for the SMEs, for example IT implementation and certification of quality management systems.

Enhanced Assistance

SMEs that are growing rapidly and seeking to break into new overseas markets have more extensive upgrading needs. For instance, a food manufacturer looking to export to the US may need to obtain ISO and HACCP certification. It also needs to formulate an effective market entry strategy. Enhanced assistance will be provided to these enterprises through co-funding of projects. This funding will cover more areas than under focused assistance.

Conclusion

While the Government's assistance schemes can provide a leg-up to SMEs, they are not meant to be a crutch. While SMEs are encouraged to avail themselves of the schemes, they should view the schemes as training wheels rather than permanent fixtures. Ultimately, SMEs should learn to take off on their own wings, without the need for training wheels.

Singapore Company Incorporation

The first thing you have to decide is what is the right company incorporation structure for you? Depending on whether you are a foreign company or an individual entrepreneur, you have different choices for business registration in Singapore.

SPRING Singapore

 Association of SMEs (ASME)

The Association of Small & Medium Enterprises is a not-for-profit organisation that welcomes all in the entrepreneurial community into its membership. With a wide array of business-centric activities, services and programmes, ASME is well-poised to facilitate the growth and development of a larger pool of SMEs in Singapore.

Pioneered by a group of entrepreneurs in 1986, the Association has grown from strength to strength and remains one of the foremost champions of the Singapore pro-enterprise movement. Today, ASME continues to work closely with both the public and the private sectors to ensure that businesses in Singapore can operate in a conducive and fair environment.

CEO Advisors Pte Ltd

CEO Advisors Pte Ltd is a Singapore based private limited company established in 2002 with a sole purpose of providing world-class business startup and business advisory services to local and international clients. Singapore has been consistently ranked as one of the best places for doing business in the world. Thanks to pro-business policies of the government, Singapore, without its own natural resources and with a history of only about 40 years, has risen to become one of the world’s strongest trade nations.

Singapore-SME.com

Singapore-SME.com is a private initiative. The site has now become a magnet site for foreign business owners and parties interested to do business in Singapore

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