Small and medium-sized enterprises (SMEs) can continue to access credit to build their capacity through the expansion of two programs, Finance Minister Lawrence Wong said yesterday.
The Temporary Bridge Loan Program and Enhanced Business Financing – Commercial Loan Program will be extended for an additional six months from October 1 to March 31 of next year. They were previously extended last October for the period from April 1 to September 30.
“For many SMEs, access to credit is an essential lifeline to get them out of this crisis … Although economic conditions have improved, this access to credit remains essential for our SMEs,” said Mr. Wong in a ministerial statement on measures to support businesses and workers affected by the latest measures related to Covid-19.
The Temporary Bridging Loan Program aims to help local businesses manage their immediate cash flow needs, while the Enhanced Corporate Finance Program – Commercial Loan covers the business needs of businesses in areas such as inventory and finance financing. stocks.
The government has supported more than $ 22 billion in loans to more than 25,000 companies through Enterprise Singapore (ESG) financing programs since the start of last year, Wong said, adding that 99% of beneficiaries were SMEs.
About half were in wholesaling, construction and manufacturing, with other sectors such as services and retail also supported, ESG said in a statement.
The parameters of both regimes remain unchanged, including the government’s 70 percent risk share.
The Monetary Authority of Singapore (MAS) will also, accordingly, extend the Singapore Dollar MAS Facility for Singapore Business Lending, which provides lower cost financing to banks and finance companies to support their business loans. local.
The facility will continue to provide Singapore dollar financing at an interest rate of 0.1% per annum for a term of two years to eligible financial institutions to support loans made under the Temporary Bridge Loan Program and the Program. corporate finance – SME working capital loan, which finances operational cash flow requirements, from Oct. 1 to March 31 of next year, MAS said yesterday.
He added that the facility had disbursed $ 13.3 billion since its inception in April last year.
Mr Wong said in his statement: “The way we have provided support during this cycle, as well as our ongoing support programs over the years, reflect our tax approach to supporting Singaporeans and businesses in Singapore. . “
The government ensured a fair tax system for all even before the pandemic, he said.
Total income tax receipts – both corporate and personal – as a percentage of gross domestic product are around 6%, about half of the Organization for Economic Co-operation and Development average by 12%, he said.
“For individuals, we operate a progressive system of transfers that provides more assistance to those who need it most … the 20 percent of households poorest by income, for example, receive about $ 4 in benefits. for every tax dollar they contribute, “he said.
Mr Wong said Singapore has a competitive tax regime for businesses, especially SMEs, as they are the backbone of the economy.
He added that a global movement to change corporate tax rules will only affect a select group of global businesses, not small businesses. “So our SMEs in Singapore can continue to benefit from low taxes.”
Singapore’s SMEs – companies with annual sales of up to $ 100 million – make up more than 95 percent of businesses operating here, but contribute less than a third of the country’s tax revenue.
More than half of these businesses do not pay corporate tax.
Besides taxes, the government recognizes that SMEs are concerned about costs such as rental, labor and utilities, Wong said. “We don’t directly offset these costs under normal circumstances, but rather offer a wide range of programs to help them improve their productivity and develop new capabilities. “
About 70 percent of government business grant disbursements from 2015 to 2019 went to SMEs.
“In times of crisis, we recognize that low-income households and SMEs face greater challenges, and that is why we have designed our interventions to benefit them the most,” Wong said.
About two-thirds of the $ 26.7 billion paid to date under the employment support program has gone to SMEs, as has 90% of the benefits of the corporate income tax abatement. of the assessment year 2020.