SINGAPORE: More funds are expected to be made available to small and medium sized enterprises (SMEs).

The third tranche of the Loan Insurance Scheme was launched on Thursday. It could potentially generate another S$3b worth of loans over the next four years.

The scheme, first announced in 2002, is being managed by Spring Singapore and IE Singapore.

They are inking the deal for the third tranche of the Loan Insurance Scheme so that more SMEs can have a better chance at securing their own financing.

The Loan Insurance Scheme was set up to make it easier for SMEs to get bank financing by insuring their loans against the risk of non-payment.

Under the deal, the government pays for half of the insurance premium and the insurer covers 75% of the risk of non-payment.

Since its launch five years ago, some S$280m worth of loans have been generated.

Ian MacDonald, President of Hong Leong Finance, said: "We've got one firm that went into a logistics business, and it was looking to service a great contract with one of the larger countries, servicing their defence forces. Now they didn't have the funding for that.

"They didn't have the funding, but they had the contract, they had the capability, they had a lot of experience in management. And we were able to help that company and now it's expanded and it's got a good footing."

Hong Leong Finance is planning to disburse S$10m-S$15m to between 15 and 20 SMEs next year under the scheme.

While there have been a slew of schemes to help SMEs secure funding, the firms have been urged to play their parts in improving their chances of obtaining financing.

"Here are some things that SMEs can do: One, better financial housekeeping; two, greater transparency in the form of detailed financial documentation and a proper business plan; three, a stronger risk management culture; and four, improved management expertise and know-how," said Lee Yi Shyan, Minister of State for Trade and Industry.

The day's event was held in conjunction with the Bluesky Finance Fair, where issues such as private equity financing were discussed. - CNA/ac