Small and medium-sized enterprises (SMEs) play an important role in contributing and sustaining our societies. In fact, SMEs account for over 98% of all Asian businesses, as they offer close to half the private sector jobs on the continent.
SMEs have become crucial for the success of economies, making it essential to have various functioning support measures for these firms. However, they face significant challenges, such as the lack of access to business financing. This issue stems from the lack of credit information, as well as the companies’ perceived riskiness. As a result, SMEs looking to borrow funds are subjected to more collateral requirements, which can be hard to meet when companies do not have sufficient assets. Hence, their growth could be stunted.
Are There Financing Options for SMEs in Singapore?
Business financing is needed to serve various purposes. It can help SMEs navigate through tough periods, and improve business capabilities as they aim to remain competitive and sustainable. Listed below are the most common financing options for SMEs in Singapore.
1. Traditional Banks
Banks are financial institutions with a physical presence in the markets they operate in. As covered in our previous article, these institutions put their applicants through a very stringent loan assessment process. Hence, obtaining any loans could be challenging for SMEs who do not meet their requirements.
2. Government Financing Schemes
The government offers a range of financing options under the Enterprise Financing Scheme (EFS). At any growth stage, SMEs can use these loans to develop new products, expand their operations, and build on their capabilities. One such financing option is the SME Working Capital Loan. Through this, SMEs across various industries can gain access to additional funding for the benefit of their business. Moreover, the government incurs a co-risk share of the borrowing amount. This makes lending less risky, and increases the chances of approval. Overall, these business grants support the growth and success of small businesses in Singapore.
3. Sustainable Financing Grants
The Environmental, Social, and Governance (ESG) scheme encourages more businesses to adopt sustainable and socially responsible practices. It has allowed for a large number of investments from sustainability focused investors. In addition, to support the development of sustainable finance in Singapore, the Monetary Authority of Singapore has launched a grant scheme for SMEs to achieve their sustainability goals. This grant functions like a regular loan, and can help businesses achieve their goals by paying off costs.
While there are multiple business financing options available to SMEs, newer SMEs often struggle to access them due to knowledge gaps. This makes it difficult for banks and other financial institutions to assess the creditworthiness of newer SMEs. In addition, many of them have weak financial structures, which poses obstacles in their path to obtaining financing.
Is there a way to bridge this financing gap? Well, private lenders are a good option.
Private Lenders Can Finance SMEs
Traditional banks are generally unwilling to provide financing for SMEs unless there is adequate collateral. Poss Capital is here to bridge the financing gap by providing an alternative source of capital. Business owners can obtain additional financing and just focus on effectively growing the business. We possess an understanding of how various industries work, and are able to focus our resources according to your business needs. Click here to apply today!
Access to Funds When You Need Them The Most
SMEs are essential in most countries, contributing significantly to economic growth and employment. However, applying for a loan is often challenging, regardless of the available options. Thus, private lenders are a good option worth considering. Accessing these funds is quick and subject to fewer requirements. Contact us today, and let’s help you get there faster.