With the competitiveness of SMEs, the government provided revised grants and benefits for SG entrepreneurs.
It has been proven that the government has a consistent commitment to business development in Singapore. It is evident, especially for SMEs. Mr Heng Swee Keat of the Ministry of Finance understands it. Also, he shared the importance of boosting small and medium enterprises on the island.
In addition, Mr Heng touched on creating new industrial opportunities. It helps to cluster companies while also supporting Trade Associations and Chambers.
SMEs can gain leverage in the ever-growing competitiveness in the industry. Furthermore, the financial support ranges from grants to tax rebates. Here is the gist of your expanded, revised grants and benefits from the budget 2016.
For years, the wide range of grants has been confusing business owners and directors. It asks for various requirements, eligibilities, and purposes. To save time, money and effort for grant processing, the government has announced the creation of the Business Grants Portal. It will be ready for use by the fourth quarter of 2016.
With this portal, SMEs and other thriving businesses can easily see the grant’s requirements. Moreover, they will know which one they are eligible to. Also, they get to know about the process. Plus, they can identify which stage their request is currently on. Therefore, they can track the grant they applied for.
The SME Working Capital Loan will provide loans for startups. The SMEs can apply from participating financial institutions (PFIs) for $300,000. In addition, the government will be co-sharing the default risk at 50%. The interest rate will be subject to the PFIs’ assessment. SMEs must be currently registered in Singapore with at least 30% local shareholding.
On the other hand, Productivity and Innovation Credit (PIC) Scheme have reduced the required expenditure. It came from 60% to 40% effective on or after 1 August 2016. However, the scheme will soon expire in 2018. The government looks forward to more targeted measures rather than broad-based support. Also, this is to push SMEs towards the direction of more thriving firms through performance improvements.
SPRING introduces an Automation Support Package with four components. First, Capability Development Grant (CDG) expanded to back up businesses. It intends to scale up its automation projects. While the grant caps at $1 million, the grant only covers up to 50% of the qualifying cost.
Investment Allowance (IA) provides additional cash to the existing capital allowance. It is exclusive to plants and machinery. The capital for each project caps at $10 million. As for enhancing financial support via loans, the government can increase the risk share further. It is under PFIs through the SPRING’s Local Enterprise Finance Scheme (LEFS) equipment loan. It will cover about 70% of the qualifying projects for SMEs.
Meanwhile, only 50% risk-share with PFIs will be for non-SMEs. Furthermore, IE will collaborate with SPRING. It is to aid businesses that aim to access overseas markets.
The government introduced SME Mezzanine Growth Fund (MGF) in 2014. It is part of the Co-Investment Programme (CIP) for the investee companies. This year the fund size increased to $150 million. The purpose is to match the private sector investments and cover smaller SMEs.
SMEs seeking to acquire other companies for growth can take advantage of their Mergers and Acquisitions (M&A). To encourage SMEs to widen their scope, the government increased the value of the qualifying deals by up to $40 million. As a result, it increases the M&A tax allowance from $5 million to $10 million.
Moreover, SMEs have a chance to have more cash at hand. The Corporate Income Tax rebate has increased from 30% to 50% of tax payable. In addition, the rebate caps at $20,000 for 2016 and 2017.
Business owners are actively encouraged to hire workers aged 55 and above. However, it comes with a monthly payment of $4,000 a month.
The Special Employment Credit scheme has been extended for another 3 years. However, the government will be raising the re-employment age in 2017. As the businesses scale up, they will need the added manpower and experiences of the older workers who can still do the job. The entrepreneurs will even receive subsidies needed for further expanding the business.
Thriving SMEs are now eyeing the international markets. Also, the government extends support. Examples are the Global Company Partnership and Market Readiness Assistance programmes and the Double Tax Deduction for Internationalisation.
The former aims to help SMEs with the cost of expansion to the overseas markets. Meanwhile, the latter allows the claims to claim a 200% tax deduction on airfare and hotel accommodations. In addition, even the salaries of Singaporeans staying abroad for business development.
The previous Budget announcement gave more hope to both budding and thriving businesses. It offers more local support through revised grants and benefits, loans, and tax rebates. Thus, it helps to grow further and expand.
Furthermore, the government encourages SMEs to broaden their horizons and eye for the overseas markets. Therefore, SMEs should efficiently take advantage of the said benefits to innovate, automate, and grow internationally.
The friendly staff will assist you with your small business loan process. Expect cash disbursement in 30 minutes upon walking through their office doors.