The Government will expand a grant to better help small and medium enterprises (SMEs) innovate and improve their capabilities.

It will set aside an extra $10 million for the Innovation and Capability Voucher (ICV), bringing the scheme's total funding to $42 million, said the Ministry of Trade and Industry (MTI) and Spring Singapore in a joint press release on Monday.

The scope of the voucher will also broaden starting from March.

Previously, firms could use the voucher scheme to pay for only consultancy services. Each firm could use up to two vouchers, valued at $5,000 apiece, in each of four areas - innovation, productivity, human resources development and financial management - for a maximum allowance of eight vouchers.

But from March 1 onwards, firms will also be able to use some of the vouchers to pay for implementing solutions within these four areas. The solutions could have been recommended by consultancies or directly procured by the firms.

The change is due to companies providing feedback that they "may not necessarily require consultancy services to diagnose a problem or propose solutions", MTI and Spring said in their release.

Allowing firms to use the vouchers to put new practices in place will help them "better manage costs, raise productivity and efficiency, and strengthen their business operations to achieve sustainable growth", they added.

The cap of eight vouchers per firm and two vouchers per category of consultancy services remains the same. But SMEs can now redirect two of those eight vouchers to implement the necessary solutions.

The vouchers are designed to be particularly helpful for smaller SMEs, which may not be able to qualify for other Government-sponsored schemes to raise productivity.

"Expanding the scope of the ICV will help SMEs, especially heartland businesses, further their productivity businesses," said Minister of State for Trade and Industry, Teo Ser Luck.

Mr Teo was speaking to reporters after a walkabout session at the Alexandra Village on Monday.

Heartland businesses tend to fall in the category of micro-SMEs, which are enterprises with less than $1 million in annual sales turnover.

Some may hire fewer than three staff, which would mean they do not meet the requirements for other schemes such as the popular Productivity and Innovation Credit.

The ICV is available to all Singapore SMEs, defined as companies with group annual sales of not more than $100 million or that do not hire more than 200 employees. They must also be located and registered in Singapore and be at least 30 per cent owned by locals.

Sole proprietorships can also qualify for the ICV, as long as they are registered with the Accounting and Corporate Regulatory Authority (Acra).