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What you need to know about Government financing schemes for SME in Singapore

Singapore is one of the best countries for startups and SMEs to thrive. That’s why it is home to lots of futuristic technologies that have changed the world. There are many reasons why Singapore is attractive to small businesses. One of them is government support through loans that incentivize growth. The loans are structured for businesses of different sizes, and very specific needs. As such, if you don’t understand how it all works, you can miss out on important loans that could potentially boost your business.

Luckily, there are companies out there that can help you out. For instance, an internet search for SME Loans in Singapore should give you MPM Capital as one of the companies that offer quality consultancy services on government financing schemes in Singapore. That said, it helps to have an idea of what to expect when applying for such financing. To improve your odds, here is what you need to know about government financing schemes for SMEs in Singapore.


The loans cater to specific needs of the business


When you are looking to apply for government financing for your SME, make sure to be specific in your application. There are several types of loans that come with these schemes and knowing which one to go for is critical. They are as below:

  • Working capital loans

These loans are meant to help businesses settle their working capital needs. Borrowers can access up to S$1 million and have a repayment period of 5 years. When applying for this loan, a borrower should understand that they carry 90% of the risk and are required to repay 100% of the loan. In case the borrower is unable to repay, the participating financing institution has the right to take all standard measures to recover their money including realizing any securities attached to the loan.

  • SME Fixed Assets

These loans are provided to SMEs looking to buy fixed assets both in Singapore and overseas. The assets financed can vary from the purchase of machines, to purchase of business premises. For these loans, businesses can apply for up to a maximum of $30 million. These loans come with a 15-year repayment period. For these loans, borrowers have a risk share of 50%. However, for startups that operate in risky and challenging markets, the risk level can rise to 70%. If the borrowing company is unable to pay, participating organizations have the right to follow the normal procedure to recover their money, including realizing any security attached to the loan.

  • Venture loan

These are loans that are designed for startups in high-growth industries. Such businesses also do not have many assets that can be used as collateral in traditional lending institutions. Therefore, these types of businesses offer warranties to buy equity as compensation in case of defaults. Such businesses are allowed to use the money they receive to expand their operations, diversify their operations, among other business activities. Borrowers can access up to S$5 million and have a repayment period of 5-years. In case the borrower defaults, the participating organization can follow the standard loan procedures to recover their money.

  • Trade loans

These are loans that are meant to help businesses finance their trade needs that include replenishing stock, and AR discounting among others. These loans cover overseas transactions as well. Companies that opt for these loans can access up to a maximum of S$10 million and have a year to repay. In terms of risk-share, the borrowing company has a 100% responsibility of the loan, and the participating institution can follow standard procedure in case of default.

  • Project loans 

These loans are meant for businesses that have ongoing foreign projects. They can be used to cover the working capital of such projects or buying equipment. Businesses can access up to S$50 million that is repayable within15 years. The borrowing business carries a risk-share of 50% but is responsible for repaying 100% of the money.

  You can negotiate the interest rate

Like other loans, the interest rates for government financing vary depending on your negotiation skills. However, as a businessperson, you might be unable to negotiate a favorable rate. Again, this is where the services of companies like MPM Capital come into play. They can help you negotiate your loan rate downwards. They can also help you get your loan fast, to meet your business needs as quickly as possible. The best part about these services is that they are relatively affordable and easy to access. It’s the best option for a business person who is not yet fully acquainted with the intricacies of the Singaporean system.