Singapore government launches SME and startup-friendly loan

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SPRING Singapore, a government agency that promotes local enterprises, will be providing unsecured working capital loans to small and medium enterprises in the country. An unsecured loan does not require borrowers to provide collateral, but they must typically have high credit ratings. Channel News Asia reports:

SPRING said the loans will be offered by 12 participating financial institutions, which will co-share 50 per cent of the loan default risks with SPRING. SMEs will be able to apply for unsecured term loans of up to S$300,000 each, and the scheme is expected to catalyse more than US$1.4 billion of loans for SMEs over a three-year period.

To be eligible for the loan programme, SMEs must be registered and operating in Singapore, have a minimum of 30 per cent local shareholding, and group annual sales turnover of not more than S$100 million or group employment size of not more than 200 employees, SPRING said.

The loans come under the SME Working Capital Loan program, announced by the government this year.

This scheme could be a boost to startups because they don’t typically qualify for traditional loans.

It seems startups and SMEs are seeing more financing options lately. Another startup-friendly loan option would be venture debt financing, which OCBC Bank, DBS Bank, and UOB offer to startups that have raised series A funding and above.

Crowdfunding sites like CoAssets and MoolahSense have also become an option for smaller enterprises to get capital.

Converted from Singapore dollars. US$1 = S$1.38.