Techblog
Government grants to help Singapore small business (2017 update)
It is not too late to take stock of the grants and schemes dedicated to SMEs that were outlined in the 2017 Budget. These will give companies a head start in the new year.
It is a challenging time for business. Singapore's GDP is forecast to grow by a conservative 2% to 3% in 2017.
Economic uncertainty has resulted in hefty job cuts across the banking, finance and media sectors. SMEs, which make up 99% of businesses in Singapore, are feeling the heat.
Still, there are many government grants and schemes to help companies improve their capabilities. A few were recently set out by Finance Minister Heng Swee Keat in the 2017 Budget, that took a birds-eye view on what SMEs need for long-term growth.
“Given the uneven performance across different sectors, we need to go beyond general stimulus, and target the specific issues faced by different sectors,” he said.
Here is a round-up of what's available.
Working capital - SME Working Capital Loan and Corporate Income Tax Rebates
Tight purse strings may throw a spanner in the works of daily operations, so to help, companies can take a SME Working Capital Loan of up to $300,000. Loans must be repaid in five years. The government shares the risk of loan defaults with financial institutions, if an SME can't cover its debts.
To qualify, a company has to be registered and operating in Singapore. At least 30% of its shares must be locally owned, among other conditions. Submit an application at selected financial institutions.
SMEs will also receive a 50% Corporate Income Tax Rebate, capped at $25,000, on earnings in 2017. But, the rebate will be reduced to 20% next year, amounting to $10,000 at most.
Here's the silver lining: no work for you. The rebate is automatically computed when SMEs file their income tax returns.
Navigate the digital landscape - SMEs Go Digital and SME Digital Tech Hub
Digital transformation goes beyond managing a corporate website and social media accounts.
Under the government’s SMEs Go Digital programme, companies receive funding for productivity tools, allowing them to take digital orders, process payments and manage their assets.
They can also acquire new digital capabilities, including protecting and analysing data. More than $80 million has been allocated to support the programme. Check out this list of pre-approved digital solutions, and approach SME Centres located island-wide to get started.
SMEs with ready digital solutions, or those looking to pilot emerging ones can also tap the programme's reach. Interested parties should contact the Infocomm Media Development Authority.
Simply looking for specialist digital advice? The SME Digital Tech Hub, run by the Association of Small and Medium Enterprises, will be opened later this year.
Growth opportunities - Tech Access Initiative, Headstart Programme and Intellectual Property Development Incentive
The Agency for Science, Technology and Research (better known as A*STAR) has several schemes for SMEs.
Its Tech Access Initiative gives SMEs access to expensive and advanced manufacturing equipment and facilities. It focuses on additive manufacturing, inspection and robotics tools and companies can learn, experiment and prototype. They are then given the opportunity to acquire these tools and scale up their operations. For more information, e-mail a-star_sme@a-star.edu.sg
SMEs entering into a Research Collaboration Agreement with A*STAR can also benefit from the Headstart Programme. It was enhanced in the 2017 Budget.
Companies enjoy royalty-free and exclusive licenses for 36 months, double the previous 18 months, on intellectual property arising from the collaboration. This lightens the financial burden of SMEs during the initial stages of commercialisation. Direct enquires to tech-offer@etpl.sg
The government has also announced a new Intellectual Property Development Incentive. Zooming in on the commercialisation of intellectual property, it will tax qualifying income at a lower rate than the standard 17%.
This effort encourages R&D investment and innovation by SMEs. It also encourages companies from high-tech industries to centre their businesses in Singapore.
More details on the incentive will be available in late 2017, according to the Economic Development Board.
Expand beyond Singapore - International Partnership Fund
A new International Partnership Fund also supports local outfits that want to scale up and internationalise. In the 2017 Budget, Mr Heng said that the government will set aside as much as $600 million for the fund.
By co-investing in opportunities, it hopes to help SMEs gain access to Asian markets in particular, expand product lines, and reap economies of scale.
The money will be managed by Heliconia Capital Management, a subsidiary of state investor Temasek Holdings. Companies with annual revenues of $800 million or under are eligible.
Few other details are publicly available, but interested companies should send an e-mail to enquiries@heliconiacapital.com.
Like larger businesses, SMEs have to confront rising business costs, along with disruption and a gloomy economic outlook. But, having significantly less liquidity makes it harder to stay afloat.
These government grants and schemes offer resources to build capabilities and expertise, so companies will be better equipped to innovate for the challenges ahead.
Summary
- SMEs make up 99% of the businesses operating in Singapore
- The Singaporean government offers SMEs a series of loans and grants to ensure the long-term growth in the industry
- The SME Working Capital Loan provides funds during periods of slow economic growth
- The Go Digital programme provides funding for SMEs to improve their digital capabilities
- The Agency for Science, Technology and Research runs several schemes focussed on innovation
- A new International Partnership Fund supports local businesses that want to grow their business outside of Singapore