$2b available to SMEs over 3 years through SME Working Capital Loan

Small and medium-sized enterprises (SMEs) will have greater access to financing from Wednesday, with the launch of the SME Working Capital Loan programme.

Administered by Spring Singapore, the programme - introduced at Budget 2016 as one way of addressing SMEs' near-term concerns while encouraging business growth and restructuring - will be offered by 12 participating financial institutions.

Under the programme, SMEs can apply for unsecured term loans of up to S$300,000 each; the scheme is expected to catalyse more than S$2 billion in loans for SMEs over a three-year period.

To be eligible for the programme, SMEs must be registered and operating in Singapore, have a minimum of 30 per cent local shareholding, and a group annual sales turnover of not more than S$100 million or group employment size of not more than 200 employees.

Spring will co-share 50 per cent of loan-default risk with the participating financial institutions.

Chew Mok Lee, assistant chief executive of Spring Singapore, said: "The SME Working Capital Loan is introduced to enhance financing support for enterprises and improve credit availability in light of the current economic situation.

"The objective is to help viable SMEs continue meeting their cash flow needs, and stay the course in their upgrading journey."

He said Spring would continue monitoring SMEs' financing needs with respect to the economic conditions, and respond accordingly to changes in conditions.

OCBC Bank, one of the 12 participating financial institutions, will offer this loan along with other government-backed loans at its two business loan centres. The OCBC Business Loan Centres were converted from the bank's Business Banking Centres located in Ubi and Bukit Batok in March.

The SME Working Capital Loan arose from the findings of the National Business Survey 2015/2016 done by the Singapore Business Federation (SBF), which found that local enterprises were facing financing issues such as rising cost of bank loans and difficulties in renewing financing.

SBF chief executive Ho Meng Kit said: "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."

The loan programme is intended to provide an additional financing channel to support viable SMEs with larger working capital needs - whether they have cash flow concerns or are looking to continue growing their business in the slowing economy.

This article was first published on June 1, 2016.
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