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SINGAPORE: From next month, the government will enhance its business financing schemes to support an additional S$2.3 billion in loans to help local firms gain access to credit in the current economic slowdown.
The measures will take effect from 1 December 2008, and will be valid for one year, at which point the enhancements will be reviewed for further extension.
The Ministry of Trade and Industry said the enhancements to its business financing schemes include increasing loan quantums and raising of government risk sharing of loan defaults.
Up to 124,000 local companies will be able to benefit from the schemes. The enhancements are part of the government's efforts to act early and ensure local enterprises have sufficient resources to operate.
Under the enhancements, the government also announced a new loan scheme for working capital.
The Bridging Loan Programme allows all local enterprises with more than 10 employees to access credit of up to S$500,000. The default risk is shared equally by the government and the financial institutions.
Small businesses with no more than 10 employees will have access to SPRING's Micro Loan Programme. The limit of this loan has been doubled to S$100,000, and the government will increase its portion of risk to 80 per cent to encourage lending to businesses.
To encourage start-ups, the government will be raising investment capital from S$300,000 to S$1 million under the SPRING's Start-up Enterprise Development Scheme.
Its Business Angel Scheme will also be raised to S$1.5 million as a permanent feature.
The government will also temporarily increase its co-match ratio, which means that start-ups will receive S$2 from the government for every dollar an investor puts into the firm.
Firms will also gain support in branching overseas. To help the firms spread their wings, eligibility criteria under the existing Internationalisation Financing Scheme (IFS) will be widened.
The turnover cap will be raised to S$300 million for non-trading companies and listed trading companies. This will help to increase the number of companies that qualify for IFS benefits.
Commenting on the move to enhance financing schemes, Senior Minister of State for Trade and Industry S Iswaran said if the take-up rate exceeds expectations, more help could be available to businesses.
"This should have a positive effect on flow of funds - it is backed up by a loan line of S$3.9 billion available for enterprises to tap on. And if the take up rate exceeds expectation, we will make available more resources with the support of the Ministry of Finance."
- CNA/sf/yt
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