Budget 2023: Scheme extensions will help SMEs manage costs, ride through challenges
Uma Devi
- Enhancements to the Enterprise Financing Scheme and Energy Efficiency Grant will be extended till Mar 31, 2024
- Under the Enterprise Financing Scheme – Trade Loan scheme, enhanced government risk share of 70 per cent will be maintained
EXTENDING the current enhancements in the Enterprise Financing Scheme (EFS) and Energy Efficiency Grant (EEG) for another year could ease the pressure on small and medium-sized enterprises (SMEs) in Singapore and help them deal with rising costs, market watchers said.
Tan Bin Eng, business incentives advisory leader for Asean at Ernst and Young Solutions, noted that inflationary pressures and macroeconomic uncertainties are coming together at the point when Singapore is just recovering from the pandemic. This puts “tremendous pressure on SMEs”.
“Cash flow is the lifeblood of SMEs, and it is critical that financing remains available to them. The EFS will encourage participating financial institutions to continue to support SMEs, and ensure that SMEs get sufficient assistance to ride through challenges,” she said.
Finance Minister Lawrence Wong said in his Budget speech on Tuesday (Feb 14) that the enhancements to EFS – which include trade loans, working capital loans and support for domestic construction projects via project loans – as well as the EEG, will be extended till Mar 31, 2024 to help SMEs cope with tighter financial conditions and higher energy prices.
Under the EFS – Trade Loan scheme, the enhanced government risk share of 70 per cent will be maintained. The scheme finances the trade needs of SMEs, such as inventory and stock financing, for both domestic and overseas transactions.
Wong said he hoped this will “encourage financial institutions to continue extending credit to viable enterprises”.
The EEG provides funding of up to 70 per cent for the implementation of pre-approved, energy-efficient machinery by SMEs operating in the food services, food manufacturing and retail sectors. Assistance is capped at S$30,000 per company annually.
The grant was introduced last June to help alleviate rising energy costs due to the Russia-Ukraine war.
Mark Addy, partner for energy and natural resources at KPMG Singapore, said the EEG will not only help businesses in the food and retail sectors cope with rising energy costs, but could also encourage increased adoption of energy-efficient equipment.
Yoon Young Kim, Schneider Electric’s cluster president for Singapore, Malaysia and Brunei, said the EEG will help “cushion the impact of rising energy costs” and improve SMEs’ competitiveness in the long term.
“Now is not the time to scale back on sustainability and decarbonisation efforts,” he added. “It is therefore encouraging that Budget 2023 continues to support businesses to press on with their green transition.”
Kurt Wee, president of the Association of Small and Medium Enterprises (ASME), said the extension of the EEG makes companies recognise the importance of focusing on energy efficiency.
However, he noted that the take-up rate of the EEG by SMEs – at about 30 per cent – is “not high enough”, and companies should “really try and act on it now” with the extension. Wee said he was hoping that the grant could have been extended to more sectors, but is hopeful the government will do so in the future.
“The different schemes help address the multiple pressures that businesses are facing on different fronts,” he said, noting that interest rates are expected to remain high and companies are having to deal with higher manpower costs and costs of funds.
