Access to financing a growing challenge for SMEs: Survey

Access to financing a growing challenge for SMEs: Survey

According to the survey, 22 per cent of 2,513 respondents said they face financing issues - up from 14 per cent last year.

General view of the business district in Singapore

SINGAPORE: Access to financing has emerged as a growing challenge faced by small and medium-sized enterprises, according to the latest SME Development Survey which polled 2,513 local enterprises across a range of sectors.

According to the findings released on Wednesday (Nov 2), 22 per cent of respondents said they face financing issues, up from 14 per cent last year.

It ranked among the top four cost concerns, behind perennial issues such as manpower, materials, and rent.

SMEs with financing issues cite higher bank interest rates as the biggest problem. They're also being squeezed harder by suppliers, with tighter access to supplier credit.

The tightening of credit available to SMEs is also starting to have a significant impact on the cash flow of companies, according to the survey conducted by DP Information Group. It found that cash flow problems are now the top business concern of seven percent of SMEs - more than double last year's figure of three percent.

Mr Lincoln Teo, Chief Operating Officer, DP Information Group said: "With both financial institutions and suppliers making access to credit harder, SME leaders need to have good management skills to avoid having cash flow problems. This means being more vigilant in the credit they offer and avoiding bad loans and default from customers."


The survey also found that eight in 10 companies said they are struggling to upgrade skills of their workers.

One of the main stumbling blocks is that firms are unable to commit employees to training initiatives because of a lean workforce - 50 per cent of respondents faced this issue. Another 38 percent said they have other priorities they need to focus their resources on.

Mr Teo said: "In the last few years, the focus has been on SMEs becoming leaner and more productive to stay competitive. Many SMEs simply do not have the capacity to redeploy their employees into training as it will affect the day-to-day operations."

He added that technology-based training programmes, such as scenario-based learning, could be a better investments for SMEs and their workforce.

Commenting on the findings, CEO of the Singapore Business Federation Ho Meng Kit said: "In general, the survey results are not surprising as our SMEs are currently grappling with the impact of a prolonged economic downturn, with SMEs in some sectors bracing themselves for a possible recession."

Mr Ho also said SMEs should be given more help to branch out overseas. "The Government and business community should collaborate and work towards enabling more companies to internationalise by providing support in areas such as identifying suitable business partners, and providing greater access to detailed market information."

"This latest survey does not indicate that the SME sector is in a crisis. There are no sharp deterioration or disruptions. This survey shows how our small businesses are gradually evolving to deal with the ongoing economic restructuring and uncertain global environment," he added.

Source: CNA/dl