It has been a proven fact that the government has a consistent commitment to business development in Singapore especially for SMEs. Mr Heng Swee Keat of the Ministry of Finance has shared that he understands the importance of boosting small and medium enterprises in the island. Mr Heng also touched the topics on creating new industrial opportunities to cluster companies while also supporting Trade Associations and Chambers.
SMEs can gain leverage in the ever growing competitiveness in the industry with the financial support ranging from grants to tax rebates. Here is the jist of your expanded benefits from the budget 2016.
The wide range of grants with various requirements, eligibilities, and purposes has been confusing business owners and directors for years. To save time, money and effort for grant processing, the government has announced the creation of the Business Grants Portal which is expected to be ready for use by fourth quarter of 2016. With this portal, the SMEs and other thriving businesses can easily see the grant’s requirements, which one they are eligible to, how to process it and the on which stage their request is currently on if they are already applying for a grant.
The SME Working Capital Loan will provide loans for startups. The SMEs can apply for a loan from participating financial institutions (PFIs) in as much as $300,000. 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 from 60% to 40% effective on or after 1 August 2016. The scheme will soon expire on 2018 as the government looks forward to more targeted measures rather than a broad-based support. This is also to push SMEs towards the direction of more thriving firms through performance improvements.
SPRING introduces Automation Support Package with four components. Capability Development Grant (CDG) has been expanded to back up businesses which intend to scale up their automation projects. While the grant is capped at $1 million, the grant only covers up to the 50% of the qualifying cost.
Investment Allowance (IA) provides additional cash to the existing capital allowance exclusive for plant and machinery. The capital for each project is capped at $10 million. As for the enhancing financial support via loans, the government can further increase the risk share under PFIs through the SPRING’s Local Enterprise Finance Scheme (LEFS) equipment loan. About 70% for the qualifying projects will be covered for SMEs while only 50% risk-share with PFIs will be given to non-SMEs. Furthermore the IE will collaborate with SPRING to aid businesses who aims to access the overseas markets.
The government had introduced SME Mezzanine Growth Fund (MGF) in 2014 as part of the Co-Investment Programme (CIP) to the investee companies. This year the fund size is increased at $150 million in order 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 of up to $40 million. This increases the M&A tax allowance from $5 million to $10 million. SMEs also have a chance to have more cash at hand as the Corporate Income Tax rebate has been increased from 30% to 50% of tax payable. The rebate is capped at $20,000 for 2016 and 2017.
Business owners are actively encourage to hire workers aged 55 and above with a monthly pay of $4,000 a month. The Special Employment Credit scheme has been extended for another 3 years as the government will be raising the re-employment age in 2017. As the businesses scales up, they will need the added manpower and experiences of the older workers who can still do the job, and the entrepreneurs will even receive subsidies needed for further expanding the business.
For thriving SMEs now eyeing the international markets, the government also extends support such as the Global Company Partnership and Market Readiness Assistance programmes and the Double Tax Deduction for Internationalisation. While the former aims to help SMEs with the cost of expansion to the overseas markets, the latter allows the claims as much as claim 200% tax deduction on airfare, hotel accommodations and even salaries of Singaporeans staying abroad for business development.
The previous Budget announcement once again gave more hope to both budding and thriving businesses with more local support through grants, loans and tax rebates to further grow and expand. The government also encourages SMEs to broaden their horizons and eye for the overseas markets as well. As for the SMEs, they should efficiently take advantage of the said benefits to innovate, automate and grow internationally.
If you need more cash for your business, do not hesitate to give Cash Mart a call. The friendly staffs are willing to assist you on your small business loan process. Expect cash disbursement in 30 minutes upon walking through their office doors.
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