What does 2024 Budget mean for SMEs?

Benjamin Lam
February 22, 2024

There is a much to unpack in the much touted “election budget” that Finance Minister Lawrence Wong shared in parliament. But what’s really in it for Singaporean businesses? We’re here to summarise it for you.

Well of course it’s another package, and this time its called the Enterprise Support Package, a multifaceted initiative aimed at providing essential support to navigate through economic uncertainties. Comprising a suite of measures including the Corporate Income Tax Rebate, enhancements to the Enterprise Financing Scheme (EFS), and extension of the SkillsFuture Enterprise Credit (SFEC), this package embodies a strategic response to empower businesses in tackling cost pressures and fostering sustainable growth.

Budget 2024: Enterprise Support Package Overview

1. Corporate Income Tax Rebate: Alleviating Financial Burdens

At the core of the Enterprise Support Package lies the Corporate Income Tax (CIT) Rebate, a crucial mechanism to ease the financial burdens on businesses. Under this rebate, eligible companies will receive a 50% tax rebate for the Year of Assessment (YA) 2024. What's noteworthy is the minimum benefit of $2,000 in the form of a cash payout, granted to companies that have employed at least one local employee in 2023. This CIT Rebate Cash Grant serves as a lifeline for businesses, providing immediate relief to offset operational costs and maintain financial stability.

For instance, consider Company A, which hired two local employees in 2023. With a CIT assessment of $30,000 for YA 2024, Company A stands to receive a $2,000 CIT Rebate Cash Grant alongside an additional $13,000 in CIT Rebate, thereby easing its tax obligations and enhancing liquidity. Importantly, the maximum total benefits capped at $40,000 underscores the government's commitment to supporting businesses of all scales, ensuring equitable access to financial assistance.

2. Enhancements to the Enterprise Financing Scheme: Facilitating Access to Capital

Access to financing remains paramount for SMEs seeking to navigate through the current shaky economic climate. Therefore, the enhancements to Enterprise Financing Scheme (EFS) fortify this access, enabling enterprises to secure essential funding across various stages of growth.

One of the best news for SMEs, the permanent enhancement of the maximum loan quantum under the EFS - SME Working Capital Loan from $300,000 to $500,000 signifies a significant stride towards addressing heightened working capital and operational cash flow needs amidst escalating costs.

Apply with Lendingpot for the EFS-SME Working Capital Loan for higher approvals

Furthermore, the extension of the enhanced maximum loan quantum under the EFS - Trade Loan and support for domestic construction projects under the EFS - Project Loan until 31 March 2025 underscores the government's commitment to bolstering businesses' resilience amid global supply chain disruptions and challenging operating environments. These enhancements provide SMEs with the financial flexibility and resources necessary to navigate through uncertainties and capitalize on emerging opportunities.

3. Extension of the SkillsFuture Enterprise Credit: Fostering Workforce Transformation

In an era characterized by rapid technological advancements and evolving market dynamics, investing in human capital emerges as a strategic imperative for businesses. The extension of the SkillsFuture Enterprise Credit (SFEC) underscores the government's commitment to fostering enterprise and workforce transformation initiatives. Eligible firms, equipped with a one-off credit of up to $10,000, are empowered to cover up to 90% of out-of-pocket expenses for supportable enterprise capability development and workforce transformation programs.

Of particular significance is the reservation of $3,000 of the SFEC for workforce transformation programs, signaling the government's emphasis on reskilling and upskilling initiatives to enhance workforce adaptability and productivity. The extension of SFEC until 30 June 2025 provides businesses with additional runway to leverage these supportable schemes, facilitating a seamless transition towards a more agile and future-ready workforce.

A Budget Fit for SMEs – Election or Not!

Now, some may wonder if this is just another "election budget" – but in our humble opinion, it's great for Singapore SME’s success in the long run. It supports our businesses in the current challenging climate and prepares them for the future. So, here's to resilience, innovation, and a brighter future for Singapore's SMEs – let's toast to prosperous Dragon Year Ahead.

Leading digital loan marketplace Lendingpot connects SMEs to its network of 45 lenders comprising relationship managers from banks, financial institutions, and private and peer-to-peer lenders in Singapore. It aims to help SMEs overcome the information asymmetry problem and lack of transparency prevalent in the SME financing sector by offering SMEs financing options such as business term loans, property loans, revenue-based financing, credit lines, working capital loans, bridging loans, invoice financing, and more.

About the author

Benjamin heads up Lendingpot with a background in all things SME. He was previously a commercial banker at Citi with experience in Relationship management, Credit Risk, Trade Operations and Corporate FX sales; and understands the difficulties SMEs face in this opaque world of SME financing.

Budget 2024
Corporate Income Tax Rebate
Enterprise Financing Scheme
SkillsFuture Enterprise Credit

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