What is Enterprise Financing Scheme?
Ever had an eureka moment for your SME but lack the finances to translate that moment into reality? A well managed cash flow system within your SME is essential to its operation. In the event that your Singapore SME lacks the finances to carry out plans, the Enterprise Financing Scheme might just be able to help your business with its business loans.
General Requirements
In order to qualify for the loans, your business must be a:
- Business entity registered and operating in Singapore
- Company that has at least 30% local shareholding held directly or indirectly by Singaporean(s) and/or Singapore PR(s)
- Company that has a Group Annual Sales Turnover not exceeding S$500 million
Besides the above points, there are certain points that apply to the majority of loans:
- An overall loan exposure limit of S$50 million per borrower group across all facilities.
- Interest rates of the loan are subjected to the loaning financial institution’s assessment
- SMEs that borrows must repay 100% of the loan amount
- Risk share between EnterpriseSG and the SME business borrowing is mostly 50%, with young entrepreneurs receiving a risk share of 70% in some loans.
What is Risk Sharing
Before we move on, it’s important to understand risk sharing between EnterpriseSG and your financial institution. In case of default, your bank will first try to collect the debt from your business. If unsuccessful, the bank will recover the remaining debt based on the risk sharing percentage with EnterpriseSG. However, your SME is still responsible for repaying the full amount of EFS loans.
With these prerequisites in mind, we can now find the business loan most suited for your business needs.
Enterprise Financing Scheme – Green Loan
The Green Loan is aligned with the Singapore Green Plan 2030 with the purpose of helping SMEs start their sustainability journey and reduce carbon footprint. Your SME should be in EFS-Green’s Qualifying Green Sectors and Activities and Qualifying Borrower Types. Loan offered include:
- Developmental Capital: To develop new green products, technology and cover fees related to consultation and certification
- Fixed Assets Loan: To purchase fixed assets like land and equipment for green initiatives
- Trade Loan: Helps finance sustainable goods, inventory and raw materials in a transaction
- Project Loan: Finances overseas and domestic green projects
- Venture Debt Loan: To support green and innovative companies with creative ideas
- Mergers & Acquisitions Loan: For the merger and acquisition of green businesses
Depending on the type of loan your SME takes up, the loan quantum ranges from S$3 million to S$50 million. As for the repayment period, it spans between a maximum of 5 years for loans with a lower loan quantum to a maximum of 20 years for a higher loan quantum. Uniquely for the Green Loan, Enterprise Singapore would provide a 70% risk sharing with participating financial institutions.
Enterprise Financing Scheme – SME Working Capital Loan
If your SME is looking for a loan to finance your operational cash flow requirements, the SME Working Capital Loan is just for you. Please note that your SME can only have a group revenue of up to S$100 million or maximum employment size of 200 employees to qualify for this.
There is a maximum loan quantum of S$500,000 per borrower that needs to be repaid in a maximum period of 5 years. The general pointers mentioned previously are all applicable to the SME Working Capital Loan. To understand more about this business loan and whether your SME might use the help of a working capital loan, you may read more here.
Enterprise Financing Scheme – SME Fixed Assets Loan
The SME Fixed Assets Loan is for SMEs to finance their investments in domestic and overseas fixed assets. This business loan might be useful if your SME is looking to purchase equipment, machines, factories and business premises for upgrading. Similar to the SME Working Capital Loan, your SME can only have a group revenue of up to S$100 million or maximum employment size of 200 employees to qualify
The maximum loan quantum is S$30 million per borrower with a maximum repayment period of 15 years. The remaining details of the loan can be found in the general requirements above.
Enterprise Financing Scheme – Venture Debt Loan
The Venture Debt Loan is for high growth startups that do not have significant assets to be used as collateral under traditional financial institutes. Instead with Enterprise Singapore, startups can back the facility using warrants or redeemable convertible preference shares to access funds to grow the business. General requirements apply to this loan.
This loan might be beneficial to your SME if you are looking to expand the business capacity through means such as:
- Product diversification
- Starting on new projects
- Merger and acquisition
- Increasing working capital needs
The Venture Debt Loan allows businesses to borrow a maximum of S$8 million per borrower which must be repaid in a maximum period of 5 years.
Enterprise Financing Scheme – Trade Loan
The Trade Loan finances multiple needs for domestic and overseas transactions by your SME. Your business can consider taking up the Trade Loan by EFS if you require help in these areas:
- Inventory/stock financing: To purchase products to sell at a later date
- Structured pre-delivery working capital financing: Have the ability to fund your operations before delivering orders
- Factoring (with recourse)/ bill of invoice/ AR discounting: To improve cash flow using outstanding invoices
- Overseas Capital Loan: To fund overseas activities
- Bank Guarantee (capped at 2 years’ tenure): The financial institution becomes a guarantor to a third party for your SME when payment cannot be fulfilled.
While general requirements apply to the Trade Loan, the maximum loan quantum is S$5 million per borrower. Borrowers are required to repay within a year. However, Budget 2024 announced an enhancement to increase the loan quantum to $10 million till 31 March 2025. Hence, SMEs that require support for their trading activities can receive further support.
Enterprise Financing Scheme – Project Loan
This purpose of the Project Loan is to finance the fulfilment of secured overseas projects. It can support working capital loans and the financing of fixed assets like equipment and machinery. It can also act as a guarantee to third parties. Other than having to meet the general requirements, it is important to note that this loan needs to be tied to an underlying contract or project and cannot be used only for operating needs.
Loan quanta differ slightly for overseas and domestic projects. The former has a maximum loan quantum of S$50 million per borrower, while the latter has that of S$15 million loan per borrower till 31 March 2025.
Enterprise Financing Scheme – Mergers & Acquisitions
As the name suggests, the Merger and Acquisition Loan is suited for SMEs looking to scale and expand their business by acquiring local or overseas target enterprises. The Mergers and Acquisitions Loan has been enhanced until 31 March 2026 to include domestic M&A activities.
SMEs that want to borrow have a maximum loan quantum of S$50 million per borrower. The other details found in the general requirements need to be fulfilled in order to qualify.
How to Apply for Enterprise Financing Scheme Loans
Your SME may apply for EFS loans to participating financial institutions but do note that loan approvals are subject to the banks’ credit approval.
Different traditional financial institutions provide different loans, however here are a few banks that offer all of the loans and their contact information:
- DBS Bank Pte Ltd: 1800 222 2200
- The Hongkong and Shanghai Banking Corporation Limited: 1800 216 9008 / 6216 9008
- United Overseas Bank: 1800 2266 121
- Oversea-Chinese Banking Corporation Ltd: 6538 1111
Take Your Business Further with Poss Capital
While the Enterprise Financing Scheme loans provide essential support, Poss Capital’s business loans can offer even more flexibility and access to funds. Partner with us to ensure better cash flow and seize growth opportunities swiftly. Contact us today to learn how our business financing solutions can elevate your business to the next level.
