The 4 Types of SME Funding Solutions For Singapore Business Owners

It is quite clear that the existence of funding institutions has boosted economic development by far. For Singapore, based on 2014 statistics, SMEs account for 99% of all the enterprises and contribute about 48% of the value-added in the nation’s economy. Additionally, they have created employment opportunities for many citizens. By that, they have proved to be a backbone for the nation’s thriving economic growth and fortunately, there are many sources of funding institutions to support SMEs where necessary. Let us share on four of SME Funding solutions that Singapore business owners ought to know fundamentally.

  1. Government Grants and Schemes

The government has come out with several schemes to assist SMEs in their upgrading/expansion plans and better cost management through grants such as the Productivity and Innovation Credit, Innovation and Capability Voucher as well as the iSprint Grant. With these schemes in place, SMEs get the opportunity to receive funding for a broad range of activities ranging from fundamental to large-scale enterprise systems. The objective is to help boost businesses and improve their abilities, enhancing productivity of Singapore enterprises.

  1. Investors Financing

Typically used by tech startups, founders are required to pitch to investors their business plans to obtain their investment in the company in exchange for a portion of company shares. Investors look at a few criteria such as whether the product is differentiated from competitors, if the market is profitable and scalable and also depending on who the management is.

Besides the exchange for shares for the sum invested in the business, another way is to obtain a percentage of returns for the sum invested. Also known as equity leveraging, this type of SME funding solution will allow businesses to obtain the funding you need without an established record of financial statements in comparison to borrowing from banks.

  1. Peer to Peer (P2P) Financing

Also known as marketplace lending or crowd funding, it is already a popular practice in markets like the US and the UK. Up and coming in the Asia markets, P2P is an alternative form of obtaining capital from a large group of unrelated investors through an online platform, offering them with an attractive return on their capital injected.

However, such platforms are not able to provide as large a quantum as compared to banks and are of a shorter period ranging from 3 months to 12 months usually.

  1. Banks and Financial Institutions Financing

Banks offer a wide range of products to cater to businesses of various industries and their needs. Besides term loans, businesses can also obtain renovation loans, overdrafts and trade facilities such as letters of credit and shipping guarantees.

Financial institutions are also able to provide loans to businesses involving professionals such as for dentists, doctors and lawyers with a practicing license.

After reading through the above four SME funding Singapore solutions in Singapore, it is prudent to review the terms of the solution you would be looking at prior to applying with the suitable agency. Choose the right one to steer your business towards sustainable growth and development.