Up to 124,000 local companies will be eligible for this scheme.
THE Government is enhancing its business financing scheme to support an additional $2.3 billion in loans to help local firms gain access to credit in the current economic slowdown.
These enhancements include increasing loan quantums, raising government risk sharing of loan defaults, and extending business financing schemes to all local enterprises.
Up to 124,000 local companies will be eligible for this scheme.
The enhancements will take effect from Dec 1.
Other than current financial schemes, MTI has introduced a new loan scheme to help firms meet their working capital needs, called the Bridging Loan Programme or BLP.
Local enterprises with more than 10 employees can access credit up to 500,000 under this scheme.
The default risk is shared equally by government and financial institutions.
In addition, smaller businesses with no more than 10 employees have access to Spring Singapore's Micro Loan programme.
The Micro Loan programme will be doubled to $100,000 to provide unsecured working loans to smaller firms.
The government will increase its proportion of risk sharing in this scheme to 80 per cent to ensure participating financial institutions continue to lend to smaller businesses here.
For the existing Local Enterprise Financing Scheme (LEFS), which helps SMEs access funds to purchase equipment, machinery and other assets, the government will also increase its sharing of the loan default risk from 50 to 80 per cent to alleviate risk taken by participating financial institutions.
Spring's Start-up Enterprise Development Scheme (SEEDS), an existing scheme to encourage start-ups, the govt will raise the investment cap from $300,000 to $1million.
For the Business Angels Schemes (BAS), the current $1million will be bumped up to $1.5million, with the govt matching the funds raised from the existing ratio of 1:1 to 2:1. This means every dollar raised by the start-up will be matched by $2 buy the govt.
And in view of the current credit squeeze, MTI will extend access to existing SME financing schemes to larger enterprises with eligibility caps of $15million in fixed asset investments (for manufacturers) or 200 employees (for firms in services).
The waiver for all enterprises will be for a year for both LEFS and the Loans Insurance Scheme (LIS).
However, for LEFS, the default risk for loans to larger enterprises will remain at 50-50 between the govt and the participating financial institution.
And to help companies venturing abroad, the eligibility criteria under the existing Internationalisation Finance Scheme (IFS) will also be widened.
Currently, companies can get financing through IFS for the acquisition of assets for use abroad or to fund expenses of projects they have secured overseas.
But the scheme is now capped at $100 million for listed non-trading companies and double that for private non-trading companies or listed trading companies.
MTI says the caps for all three different types of firms will be raised to $300 million to give more local businesses access to the benefits of IFS.
And similarly, the government will increase its sharing of the loan default from the current 70 to 80 per cent. MTI says this move will help encourage financial institutions to provide loans to companies expanding overseas.
