Like other countries, the economic status of Singapore fluctuates which result to an expressed pessimism among economists and people in the business industry. With this, small and medium-sized enterprises (SMEs) who are looking for more funds are challenged to face the high-interest rates for bank loans, the need for additional collateral, and the suppliers tightening credit access.
In this situation of economic slowdown, one can use the aid of a consultancy firm for the business needs. The firm can also help the SMEs procure financing from capital providers.
But as the worse scenario of securing bank loans persist, are there other available funding options for SMEs?
This article will look at the three alternative ways for SMEs to raise funds other than bank loans.
- Government Schemes and Government Grant for SME
In the world, Singapore has one of the most attractive and ideal business environments. Because of this, the government actively offers it support to start-ups, entrepreneurs, and investors by offering Singapore grants for SME, new businesses, and non-financial support in terms of management, training, equipment upgrade and other programs to further develop business productivity, efficiency and more.
The government of this country has launched a number of financial schemes to support these companies considering the importance of SMEs in its local economy. Here are some of the grants and assistance schemes offered to help local and foreign SMEs and start-ups begin, operate, and grow in the country: the SME Equipment and Factory Loan, the SME Venture Loan, and the SME Working Capital Loan.
- Invoice Trading
According to the relevant department of the trade industry in Singapore, currently, there are around 180,000 local SMEs in the country and they make up the 99 percent of the nation’s enterprises. Therefore, SMEs contribute to almost half of the country’s Gross Domestic Product (GDP) and employ 70 percent of the workforce.
This information clearly shows the importance of SMEs in the local economy of the country. Because of this, the government launched certain financial schemes to support these firms. The government viewed grants for SME Singapore as a great aid to the country’s growth in various aspects.
In this scheme, the SME Micro Loans under the Local Enterprise Finance Scheme (LEFS) of the government is included. It is available to local SMEs with no more than ten employees. For example, an application for micro loans of up to S$100,000 which is payable for a repayment period of up to 4-year.
Another alternative financial option or a form of crowdsourcing is the crowdfunding, this is the practice of funding a venture or project by raising money from a large number of individuals, this is mainly advertised using some dedicated platforms online.
In the recent years, crowdfunding has gained popularity. It grows from only 400 platforms to more than 2,000 platforms.
It has four types, the equity-based, reward-based, donation-based, and debt-based otherwise known as peer-to-peer lending.
If you need more information regarding the topic discussed in this article, online research or direct contact with the various government agencies are recommended.