Explaining SPRING Singapore's Government-Backed SME Loans

Singapore's Standards, Productivity and Innovation Board (SPRING) helps banks provide loans tailored to SMEs' financing needs. The government-backed loans range from small micro loans to large, industry-specific loans.

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What is SPRING and What Does it Do?

SPRING Singapore is an agency within the Ministry of Trade and Industry. It is tasked with economic development in Singapore, specifically facilitating the growth of Singaporean businesses and building trust in these companies. Later this year SPRING Singapore will merge with International Enterprise Singapore, which focuses on the growth of Singapore-based businesses internationally, to form Enterprise Singapore.

In an effort to expand the availability of financing for SMEs, which are not always eligible for bank loans, SPRING Singapore partnered with more than 15 financial institutions to offer SME-specific loans. To make this program possible, SPRING Singapore accepts 50% loan default risks from the loans. The program is intended to provide S$2 billion in loans for SMEs.

Eligibility Details

To be eligible for loans in this program, SMEs must be registered and operating in Singapore with at least 30% local shareholding. Additionally, eligible companies' must have group revenue of S$100 million or less or group employment of 200 or less. However, meeting these requirements does not guarantee financing. Under this program, banks have full discretion over the application process and interest rate determination.

SME Micro Loans

The micro loans offered by SPRING Singapore's program are designed to provide small amounts of financing (S$100,000) to allow Singapore's smallest SMEs to conduct their daily operations or upgrade their equipment. Only small SMEs are eligible, which is defined as companies with annual sales of S$1 million or less, or 10 employees or fewer.

The maximum duration of these micro loans is 4 years. Typically, general purpose short-term loans charge higher interest rates than specific-use or long-term interest rates. This is because they are seen as more risky than specific-use loans and offer shorter return periods than long-term loans. Small SMEs seeking small funding amounts should consider applying for one of these loans.

Participating Institutions
DBS Bank LtdEthoz Capital LtdHong Leong Finance Ltd
IFS Capital LtdMalayan Banking BerhadORIX Leasing Singapore Ltd
Oversea-Chinese Banking Corporation LtdRHB Bank BerhadUnited Overseas Bank Ltd

SME Venture Loans

Singapore SPRING's SME venture loans offer up to S$5 million to innovative, high growth SMEs in fields like tech and biomedical for the purpose of business expansion. For example, high growth SMEs considering financing options for mergers and acquisitions, large projects, asset purchases or working capital needs could consider these venture loans in order to grow their business. Venture loans tend to charge lower interest rates than short-term loans because they offer longer return profiles. This is especially true if they are issued for a specific use, as specific-use loans are seen as less risky from the investors' perspective.

Participating Institutions
DBS Bank LtdOversea-Chinese Banking Corporation Ltd
United Overseas Bank LtdInnoven Capital

SME Equipment and Factory Loans

SMEs seeking to make significant upgrades to their equipment or factory should consider the SPRING Singapore-backed equipment and factory loans. These loans offer maximum financing amounts of up to S$15 million over tenures of up to 8 and 10 years for equipment and factory loans, respectively. These large large equipment and factory loans allow SMEs to significantly expand their operations with lower interest rates than other loans. This is because as long-term and specific-use loans, investors see them as less risky investments.

Participating Institutions
DBS Bank LtdEthoz Capital LtdHong Leong Finance Ltd
IFS Capital LtdMalayan Banking BerhadORIX Leasing Singapore Ltd
Oversea-Chinese Banking Corporation LtdRHB Bank BerhadSing Investments & Finance Ltd
Singapura Finance LtdUnited Overseas Bank Ltd

SME Working Capital Loans

SPRING Singapore also backs working capital loans for SMEs. These loans offer up to S$300,000 over up to 5 years. Small businesses that seek financing for their day-to-day operations (e.g. payroll, rent, utilities) should consider these loans.

Participating Institutions
DBS Bank LtdEthoz Capital LtdHong Leong Finance Ltd
IFS Capital LtdMalayan Banking BerhadORIX Leasing Singapore Ltd
Oversea-Chinese Banking Corporation LtdRHB Bank BerhadStandard Chartered Bank
The Bank of East Asia LtdThe Hongkong and Shanghai Banking Corporation LtdUnited Overseas Bank Ltd

Loan Insurance Scheme

SPRING Singapore's Loan Insurance Scheme (LIS) and Loan Insurance Scheme Plus (LIS+) programs aim to provide SMEs access to financing to facilitate trade deals. The LIS+ program is complementary to LIS and is designed to provide trade financing of up to S$5 million to more SMEs that may not qualify for LIS. SMEs that need financing in order to conduct trade and grow their business should consider the LIS and LIS+ programs and their many offerings for trade financing. Both programs allow for a number of trade financing options, and all three have varying risk profiles and will receive different interest rates.

The inventory/stock financing facilities allow SMEs to borrow on a revolving credit basis, with its inventory acting as security for the financing. Of all of the trade financing options, inventory financing offers the highest interest rates, as it represents the riskiest type of financing because work has not been agreed upon or produced.

The structured pre-delivery working capital financing allows businesses to finance their daily operations based on confirmed work orders or letters of credit from customers that guarantee repayment. This type of financing offers higher interest rates than factoring, but lower than inventory financing, as the financing is based on work that has not been completed but has been agreed upon with the businesses' customers.

The factoring option allows SMEs to borrow based on work that they have already completed. Factoring gives banks the highest likelihood of repayment as the work is already completed and businesses expect to be repaid and thus generally requires lower interest rates than pre-delivery working capital and inventory/stock financing.

Finally, banker's guarantees, which are only available through LIS, allow SMEs to receive a guarantee from their bank that they will repay their trade partners. This facilitates trade between businesses by loaning money to purchasers to allow them to buy goods from producers. This allows producers to receive funding in a timely manner and confidently provide orders their customers without the risk of non-repayment.

Participating Institutions
Bibby Financial Services (Singapore) Pte LtdCIMB Bank BerhadDBS Bank Ltd
Hong Leong Finance LtdMalayan Banking BerhadOversea-Chinese Banking Corporation Ltd
RHB Bank BerhadStandard Chartered BankThe Bank of East Asia Ltd
The Hongkong and Shanghai Banking Corporation LtdUnited Overseas Bank Ltd

Bridging Loan for Marine & Offshore Engineering Companies

The bridging loan offers Singaporean marine and offshore engineering SMEs up to S$5 million per company an up to S$15 million per group for up to 6 years to cover short term financing gaps. Long-term bridging loans offer lower interest rates than short-term loans, as they offer longer return profiles, but higher interest rates than specific-use loans, which are considered less risky. This loan offers shipyards, offshore services providers, exploration and production companies, oil and gas companies, and related contractors and suppliers the ability to obtain financing to make sure their operations continue in between other loan maturities.

Participating Institutions
DBS Bank LtdEthoz Capital Ltd
Hong Leong Finance LtdIFS Capital Ltd
Malayan Banking BerhadOversea-Chinese Banking Corporation Ltd
RHB Bank BerhadStandard Chartered Bank
The Hongkong and Shanghai Banking Corporation LtdUnited Overseas Bank Ltd

Summary of SPRING Singapore SME Loan Program

Loan Type

Maximum Loan AmountMaximum Tenure

Micro Loans

S$100,0004 years
Venture LoansS$5 millionUnknown
Equipment and Factory LoansS$15 million8 - 10 years
Working Capital LoansS$300,0005 years
Loan Insurance SchemeNo maximum / S$5millionUnknown
Bridging LoansS$5 million6 years

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