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Singapore Budget 2017: Three SMEs reflect on 2016 grants and schemes
SMEs received a lot of attention in the 2016 budget, which is not a surprise as SMEs form 99 per cent of the businesses in Singapore. The government announced many schemes and grants to help companies grow and improve their capabilities. How did SMEs benefit?
The measures announced by the government in the 2016 budget included giving more grants to SMEs, raising corporate tax income rebates, extending some special credit schemes and helping businesses to leverage technology.
So how have Singapore-based SMEs benefited from Budget 2016?
Funding for expansion plans
Expansion plans had been in the works for Singapore office furniture provider d’Doubles for at least two years. However, before last year, it was difficult to fund these expansion plans.
Mr Andrew Tan, the managing director at d’Doubles, said: “Often, we had to finance the projects ourselves first so it was a challenge managing cashflow. It was difficult thinking of growth plans”.
Fortunately, the government announced the SME Working Capital Loan (WCL) scheme last year as one of its schemes for the 2016 budget. The WCL allows businesses to get loans from financial institutions of up to S$300,000. The Singapore government co-shares half of the default risk of such loans with participating financial institutions.
Mr Tan applied for this loan and the funding has allowed him to carry out his expansion plans. These plans include a bigger showroom in Singapore. The WCL also enabled d’Doubles to finance larger scale projects.
“The working capital loan and tax incentives have given the company additional finances to better plan and chart our business growth forward in 2017, as well as our overseas venture in Southeast Asian countries like Malaysia and Myanmar,” says Mr Tan.
Looking forward, Mr Tan hopes the government would continue to support SMEs through more aggressive policies, helping them to cope with high business operations and expenses.
Budget helped SME deal with costs incurred with automation
Beverage company Vita Coco needed to automate to keep up with its growth. But without any assistance, the automation process would have been much slower.
Operations Financial Planning & Analysis manager Claudia Cheng used Productivity and Innovation Credit which allows companies to claim up to 400 per cent in tax deductions or up to S$100,000 cash payouts per year. The criteria for each scheme are is different but the main condition to fulfil is to have CPF (Central Provident Fund) contributions for at least three local employees in the relevant month.
Beverage company Vita Coco applied for the ‘Acquisition and Leasing of PIC IT and Automation Equipment’ scheme, which helps with certain costs incurred in acquiring or leasing IT and automation equipment.
Ms Cheng said that the reduction of IT costs helped the company to stretch its dollar to invest in more enhancements that would reduce low-value-added administrative work and create more time to focus on the business strategy.
Helping you get ready for internationalisation
To grow, SMEs often have to expand overseas but that comes with significant costs including funding for staff overseas. Mr Donovan Tan from Loupe Creative Consultancy faced those same concerns and sought assistance from the Market Readiness Assistance (MRA) Grant.
The MRA grant helps companies with up to 70% of eligible third-party costs such as overseas market set-up identification of business partners or overseas market promotion.
“[The MRA grant helped us] in our internationalisation efforts as well as our staffing concerns”, said Mr Tan.
For 2017, Mr Tan would like to see more employment credits available to SMEs to help with staffing concerns.
“Foreign worker levy charges have also increased by a fair bit in the service sector, so it would be good for that amount to stabilise and not continue to rise,” said.
Budget 2017 is expected to be delivered on February 20 by Finance Minister Heng Swee Keat. Andrew Tan, Lala Interior and Donovan Tan recommend SME owners to explore all the incentives available and leverage on government support to continue investing in business innovation and strengthening business fundamentals.
Summary
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The Working Capital Loan allows SMEs to obtain loans of up to S$300,000.
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The Productivity and Innovation Credit (PIC) allows companies to claim up to 400 per cent in tax deductions or up to S$100,000 cash payout pear year.
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The Market Readiness Assistance (MRA) Grant helps companies with up to 70% of eligible third-party costs such as overseas market set-up identification of business partners or overseas market promotion.