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Budget 2020 - Part 2 (Resilience): A New Wave Of Financing Schemes For SMEs

Jennifer Tjahyadi
March 30, 2020

On 11th March 2020, COVID-19 was declared a global pandemic by The World Health Organisation (WHO). It has taken a big toll on the economy, and many jobs and livelihoods are at stake.

To address these issues, Deputy Prime Minister Heng Swee Keat announced several support schemes last month under the Budget 2020, or “Unity Budget”,  to cushion the impact of COVID-19.

However, with recent cases emerging at an exponential rate, the Singapore government has decided to introduce the Supplementary Budget, or the “Resilience” Budget.

The Resilience Budget that amounts to over $48 billion focuses on three main areas to help SMEs, namely cashflow, cost and credit. Here is a list of schemes and programmes for SMEs:

1.  Cost Support

The government has extended a 25% cash grant (up from 8%) to employers on the first $4,600 (up from $3,600) of the gross monthly wages of each local employee (Singapore citizens and permanent residents only) on their CPF payrolls. This is granted for a period of 9 months instead of 3 months to help employers retain their employees.

In particular, the Cash Support seeks to provide additional assistance to the following industries that are badly affected by the virus:

a.   Aviation and Tourism Sectors

Under the Enhanced Job Support Scheme, SMEs in the aviation and tourism sectors are entitled to a 75% cash grant on the first $4,600 of the gross monthly wages of each local employee in both sectors on their CPF payrolls.

On top of that, an additional $350m will be set aside for the Enhanced Aviation Support Package to provide cost relief for airlines, ground handlers and cargo companies, while $90m will be put on standby to help the tourism industry recover from this difficult time.

b.   Food Services Sector

For SMEs in the food and beverage sector, a cash grant of 50% to employers in this sector will be given on the first $4,600 of the gross monthly wages of each employee on their CPF payrolls.

c.    Land Transport Sector
A Special Relief Fund will be made available for taxi hires and private-hire car (PHC) drivers, with payments of $300 per vehicle per month until the end of September 2020.  Self-employed drivers are entitled to $1,000 extra a month for 9 months. Private bus owners are also entitled to a 1-year road tax rebate and a 6-month waiver of parking charges at government-managed parking facilities.

d.   Arts & Culture Sector

As for the arts and culture sector, a $55m support package will be given to safeguard jobs, and support digitalization and skill enhancement. 

2. Cash Support

To help SMEs reduce costs during this trying period, the government has waived property tax for qualifying commercial properties. It aims to cover more property types such as hotels, serviced apartments, tourist attractions, shops and restaurants. Integrated resorts and non-residential properties can obtain  up to 60% and 30% property tax rebate respectively.

Hawker stall owners managed by the National Environment Agency, tenants and non-residential tenants of government agencies are eligible for 3 months, 2 months and 0.5 months rental waiver respectively. On top of that, ALL government fees will be frozen for a year starting from 1st April 2020.

In terms of income taxes, the government has also granted businesses a three-month deferment on income tax payments to ease immediate cash flow concerns. This applies to companies with corporate income tax payments due in April, May and June 2020.

3. Credit Support

For Credit Support, the government is increasing the loan limits for the respective schemes and programmes:

Scheme / Program Description Budget 2020 Supplementary Budget 2020

Enterprise Financing Scheme – Working Capital Loan

  • Financing to bridge working capital gap
  • Applicable to all eligible SMEs

  • Eligible SMEs can borrow up to $600k

  • Risk Share: 80%

  • Valid for 1 year from March 2020
  • Applicable to all eligible SMEs

  • Eligible SMEs can borrow up to $1m

  • Risk Share: 80%

  • SMEs may request for deferment of principal repayment for 1 year subject to approval

Enterprise Financing Scheme – Trade Loan

  • Covers company’s domestic and overseas transactions

  • Insures loans that are beyond the capacity of LIS insurers
  • Applicable to all eligible SMEs

  • Eligible SMEs can borrow up to $5m

  • Risk Share: 80%

  • Valid for 1 year from March 2020
  • Applicable to all eligible SMEs

  • Eligible SMEs can borrow up to $10m

  • Risk Share: 80%

  • Valid for 1 year from 1 April 2020

Loan Insurance Scheme (LIS)

  • Insurance provided by Participating Financial Institutions (PFI) to help SMEs secure their short-term trade financing loan
  • Applicable to all eligible SMEs

  • Insurance premium support of up to 50%

  • Valid for 1 year from March 2020
  • Applicable to all eligible SMEs

  • Insurance premium support of up to 80%

  • Valid for 1 year from April 2020

Temporary Bridging Loan Programme (TBLP)

  • Provides cashflow support for enterprises
  • Applicable to Tourism Sector only

  • Eligible SMEs can borrow up to $1m capped at interest rate of 5% p.a.

  • Risk Share: 80%

  • Valid for 1 year from March 2020
  • Applicable to ALL Sectors

  • Eligible SMEs can borrow up to $5m capped at an interest rate of 5% p.a.

  • Risk Share: 80%

  • Valid for 1 year from 1 April 2020
Additional Information on Budget 2020 & Supplementary Budget 2020  
  • Budget 2020: Stabilisation and Support Package

  • Budget 2020: Supporting our Business Inforgraphic

  • Supplmentary Budget 2020: Resilience Budget Infographic

  • Enterprise Singapore Access Financing Scheme

  • 4. Other Support Programmes

    Aside from cash, credit and cost support, the government has also set up programmes to help SMEs continue their daily operations, and sustain the growth and innovation of companies.

              a.   Support for Capability Development

    The Productivity Solutions Grant (PSG) will be raised to 80% to assist SMEs that are interested in adopting IT solutions and equipment to streamline their business processes. The Enterprise Development Grant is for SMEs that require grants to grow and expand their business. This grant has increased to 80% but may be raised to 90% for severely affected businesses on a case-by-case basis. Both of these enhancements are available to SMEs until the end of 2020.

               b.   Resilience Building

    To foster the spirit of resilience during this time, SG Together Enhancing Enterprise Resilience (STEER) will empower SMEs, trade associations and chambers (TACs) or industry groupings to create proposals with the type of assistance needed to overcome the current challenges faced.

    5.  Important Points To Note About The Supplementary Budget 2020 (Credit Support Programmes)

    The following information clarifies some of the questions you may have with regard to the credit support programmes rolled out in the Supplementary Budget:

    a. Can I borrow more with the increased loan amount?

    An increase in the maximum loan quantum of the EFS – Working Capital Loan does not mean that SMEs are automatically qualified to obtain larger loans.

    SMEs are still required to apply to participating financial institutions (PFIs) with their own set of credit evaluation criteria.

    SMEs that qualify for these loans may then obtain larger loans. However, those that do not qualify will still be unable to obtain the loan, even though the maximum loan quantum has been increased. 

    b. How much am I eligible to borrow?

    The loan amount that you are eligible for is dependent on the essential documents for loan applications and the financier’s credit assessment criteria.

    Other than that, it may also depend on other factors (e.g. existing loans that you are servicing).

    c. What should I do if I am not eligible for any of the credit support programmes above? Where can I go to obtain a loan?

    If you are not eligible for a loan, try to find out the reason for rejection from the financial institution. This will help you with your loan application in the future.

    If the rejection is due to over gearing (too many existing loans), it is recommended that you settle your current debts first.

    Depending on the financial institution, you may need to wait for up to 1 year before a particular financier considers your loan application again.

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    With COVID-19 cases on the rise every day globally, mounting uncertainties will do doubt ensue. Experts expect it to be a protracted battle that will last for a year or more. It is thus important to manage the resources that you currently have wisely.

    Reset or realign your work goals and tasks if needed to ensure that your business is still receiving income through other channels.

    Focus more on strengthening relationships with your clients and explore their needs through online meetings to reduce physical contact.

    In this time of distress, it is important to stay united as a company and a country. Spread a little love, care and positivity to your clients, your community and the people outside your circle. Be responsible, stay safe and encourage social distancing. With resilience, we can overcome this.

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    About the author

    Jennifer loves helping SMEs in their business growth journey. She is also an epicurean and has perpetual wanderlust. During the weekend, she weaves poems out of thin air and buries herself in books.

    Budget 2020
    Financing Schemes
    business loan
    SME Loan
    Credit Support

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