SME Loan – Enterprise Financing Scheme
SME Loan also known as The Enterprise Financing Scheme – SME Working Capital Loan (EFS-WCL) helps SMEs finance their operational cashflow needs.
Eligibility
- Business entity registered and operating in Singapore
- Company has at least 30% local equity held directly or indirectly by Singaporean(s) and/or Singapore PR(s), determined by the ultimate individual ownership
- Company has a Group Annual Sales Turnover not exceeding S$500 million
- For “SME Working Capital”, an SME is defined as having a Group revenue of up to S$100 million or a maximum employment size of 200 employees
Frequently Asked Questions
How is Enterprise Singapore’s Enterprise Financing Scheme different from previous financing schemes managed by SPRING and IE Singapore?
- The streamlined Enterprise Financing Scheme will have common eligibility criteria and application platform to simplify application process for businesses
- Enhanced support for young enterprises (incorporated within the last 5 years from date of scheme application)
- Enhanced support for markets with Standard & Poor’s (S&P) ratings of below BBB- or are not rated
Are there any specific industries that the Enterprise Financing Scheme is targeted at?
Does Enterprise Financing Scheme help newly established businesses secure financing?
Yes. To help young companies*, Enterprise Financing Scheme will provide government risk sharing of up to 70% to participating financial institutions (PFIs). This aims to help catalyse participating financial institutions’ lending to these companies.
From 1 October 2022 – 31 March 2024: S$500,000 / Borrower
Note: Borrowers are subject to an overall borrower group limit of S$5 million for EFS-WCL. In addition, there is an overall loan exposure limit of S$50 million per borrower group1 across all facilities
- Risk share is at 50%
- Young enterprises² may receive a risk share of 70%.
- The borrower is responsible to repay 100% of the loan amount
- When defaults occur, the participating Financial Institutions (FIs) are obligated to follow their standard commercial recovery procedure, including the realisation of security, before they can make a claim against EnterpriseSG for the unrecovered amount in proportion to the risk-share
Small and medium-sized enterprises (SMEs) play a critical role in driving economic growth, especially in dynamic markets like Singapore. Yet, many of these businesses face challenges in accessing the funding they need to seize new opportunities and grow. SME loans are specifically designed to address these financial challenges, offering businesses a reliable source of funding to capitalize on expansion, innovation, and market opportunities. Here’s how SME loans can empower businesses to unlock their full potential.
Fueling Business Expansion
Growth opportunities often require capital investment, whether for expanding to a new location, increasing inventory, or hiring additional staff. For example, a restaurant looking to open a second branch or a retail store planning to increase stock levels for peak seasons would need substantial upfront costs. An SME loan can provide the necessary capital, allowing businesses to scale up their operations and reach more customers without disrupting cash flow.
Funding for Equipment and Technology Upgrades
Upgrading equipment or investing in technology can improve productivity and efficiency. For instance, manufacturing companies can use SME loans to purchase modern machinery, leading to faster production and reduced operational costs. Similarly, businesses in the service industry might invest in software solutions or automation tools that streamline processes. Access to SME loans means businesses can stay competitive by investing in assets that enhance service delivery and operational efficiency.
Supporting Cash Flow for Daily Operations
Cash flow issues can limit an SME’s ability to take on new projects or meet short-term obligations. SME loans provide essential working capital to manage day-to-day operations, such as paying suppliers, handling payroll, or covering utility bills. This financial cushion allows businesses to operate smoothly, especially during seasonal slowdowns or periods of unpredictable revenue, giving them the confidence to pursue new contracts and clients without cash flow concerns.
Tapping Into New Market Opportunities
Expanding into new markets, whether geographically or by diversifying product offerings, can be a powerful growth strategy. However, market expansion requires investment in market research, product development, marketing, and distribution. An SME loan can provide the funding needed to explore new markets and develop a presence without straining existing resources. By taking advantage of these opportunities, businesses can build brand recognition and establish themselves in new areas.
Building Creditworthiness
An often-overlooked benefit of taking out an SME loan is that it can improve a business’s credit profile. By responsibly managing loan repayments, businesses build a positive credit history, increasing their likelihood of securing larger loans or investment funding in the future. This is particularly beneficial for start-ups or newer businesses aiming to build credibility in the financial sector and gain access to better financing terms over time.
SME loans are more than just financial tools; they are strategic resources that enable businesses to act swiftly and confidently when opportunities arise. With the support of a well-structured loan, SMEs can strengthen their operations, innovate, expand, and ultimately, achieve sustainable growth. By providing a financial lifeline, SME loans help businesses in Singapore and beyond realize their potential and thrive in a competitive marketplace.
