Credit schemes to help SMEs extended to March 31

Small and medium-sized enterprises (SMEs) can continue to access credit to build their capabilities with the extension of two schemes, Finance Minister Law-rence Wong said yesterday.

The Temporary Bridging Loan Programme and the Enhanced Enterprise Financing Scheme - Trade Loan will be extended for an additional six months from Oct 1 to March 31 next year. They were previously extended last October for the period from April 1 to Sept 30.

"For many SMEs, access to credit is a critical lifeline to tide them through this crisis... While economic conditions have improved, such access to credit remains critical to our SMEs," Mr Wong said in a ministerial statement on the support measures for businesses and workers affected by the latest Covid-19 measures.

The Temporary Bridging Loan Programme is aimed at help-ing local companies manage their immediate cash flow needs, while the Enhanced Enterprise Financing Scheme - Trade Loan covers businesses' trade needs in areas such as inventory and stock financing.

The Government has supported more than $22 billion worth of loans to more than 25,000 enterprises through Enterprise Singapore's (ESG) financing schemes since the start of last year, said Mr Wong, adding that 99 per cent of the recipients were SMEs.

About half were in wholesale trade, construction and manufacturing, with other sectors such as services and retail also supported, ESG said in a statement.

The parameters for both schemes remain unchanged, including the Government's risk share of 70 per cent.

The Monetary Authority of Singapore (MAS) will also extend, accordingly, the MAS Singapore Dollar Facility for Enterprise Singapore Loans, which provides lower-cost funding for banks and finance companies to support their lending to local enterprises.

The facility will continue to provide Singapore dollar funding at an interest rate of 0.1 per cent per annum for a two-year tenor to eligible financial institutions to support loans made under the Temporary Bridging Loan Programme and Enterprise Financing Scheme - SME Working Capital Loan, which finances operational cash flow needs, from Oct 1 to March 31 next year, MAS said yesterday.

It added that the facility has disbursed $13.3 billion since its introduction in April last year.

Mr Wong said in his statement: "The way we have gone about providing support this round, as well as our ongoing support schemes over the years, reflect our fiscal approach in supporting Singaporeans and businesses in Singapore."

The Government has ensured a fair tax regime for all even before the pandemic, he said.

Overall income tax revenue - both corporate and personal - as a percentage of gross domestic product is around 6 per cent, about half the Organisation for Economic Cooperation and Development average of 12 per cent, he said.

"For individuals, we layer on a progressive system of transfers that provides more help for those in greater need... the bottom 20 per cent of households by income, for example, receive around $4 of benefits for every dollar of tax they contribute," he said.

Mr Wong said Singapore has a competitive tax regime for companies, especially SMEs, as they are the backbone of the economy.

He added that a global movement to change corporate tax rules will affect only a select group of global companies, and not smaller enterprises. "So, our SMEs in Singapore can continue to enjoy low taxes."

Singapore's SMEs - companies with an annual turnover of up to $100 million - make up more than 95 per cent of active companies here but contribute less than a third of the nation's corporate income tax revenue.

More than half of such companies do not pay any corporate tax.

Besides taxes, the Government recognises that SMEs are concerned about costs such as rental, labour and utilities, said Mr Wong. "We do not directly offset such costs in normal times, but instead provide a wide range of schemes to help them improve productivity and build new capabilities."

About 70 per cent of government grant disbursements to businesses from 2015 to 2019 went to SMEs.

"During times of crises, we recognise that lower-income households and SMEs face bigger challenges, and that is why we have designed our interventions to benefit them the most," said Mr Wong.

About two-thirds of the $26.7 billion paid out to date under the Jobs Support Scheme went to SMEs, as did 90 per cent of the benefits from the Year of Assessment 2020 corporate income tax rebate.