Continued support for SMBs as the economy reopens

13 October 2020 | SMB | 5 min read

To help firms cope with the impact of COVID-19, the government has provided support over four earlier Budgets. As the economy further reopens, Finance and Deputy Prime Minister Heng Swee Keat outlines recovery plans for the next six months and beyond. We round up the support measures for SMBs.

In the October 2020 ministerial statement by Mr. Heng, he observed that the previous support measures from the four earlier budgets have substantially cushioned the economic impact of COVID-19.

As per Monetary Authority of Singapore (MAS) estimates, the combined budgets will prevent the economy from shrinking by a further 5.6% of GDP in 2020, and 4.8% in 2021.

Additionally, economic support measures will offset some of the rise in the resident unemployment rate by about 1.7 percentage points.

With the stabilisation of the COVID-19 situation and the resumption of the economy, support measures will be further enhanced to aid business’ long-term recovery.

Here are what SMBs can expect.

Opening up of more activities

More economic activities will progressively open up, at a pace enabling new practices to be internalised for health & safety.

Construction activities will gradually resume as the government completes worker testing. However, sectors like aviation and tourism will only recover at a time where people around the world feel safe enough to travel again.

Businesses involving large gatherings, including MICE, sports and concerts, will recover slowly, unless rapid test kits are effective in screening participants for safe entry.

Support for hardest-hit sectors

Previously announced in August, the Enhanced Aviation Support Package, a temporary redeployment programme, will continue to support aviation workers.

The SingapoRediscover Vouchers will encourage Singaporeans to support tourism businesses like licensed hotels, tourist attractions and tours.

Extension of the Enhanced Training Support Package

The Enhanced Training Support Package (ESTP) will be extended till 30 June 2021, to provide enhanced course fee subsidies for hard-hit firms.

In addition to existing sectors like air transport, retail and tourism, the ESTP is now extended to the marine and offshore sector. Absentee payroll rates will also be lowered to 80% from January 2021, capped at $7.50 per hour.

Enhanced support for startups

In August, support for startups was announced via the Startup SG Founder programme. To date, more than 500 aspiring entrepreneurs have signed up for the three-month Venture Building programmes.

Through the Jobs Growth Incentive, wage support (of between 25% and 50%) will be provided for new local hires in firms which increase their total local headcount. Support will be for the first $5,000 of gross monthly wages for up to 12 months.

Extension of capability-building grants

As a boost to businesses looking to transform and digitise, capability-building grants will be extended. These grants enable firms to tap on new sources of growth.

In particular, Enterprise Singapore will be extending the enhanced Enterprise Development Grant and enhanced Productivity Solutions Grant. SMBs who tap on both grants will receive the enhanced funding support level of up to 80 per cent until September 30 2021.

Supporting local enterprises looking to expand overseas, the Market Readiness Assistance Grant will be expanded from November 1 to include support for participation in virtual trade fairs. The funding support level will also increase to 80 per cent between November 1 this year and September 30 2021.

Offering working capital to local enterprises, the Temporary Bridging Loan Programme will be extended for six months until September 30, 2021.

MAS will also extend the MAS Singapore Dollar Facility for Enterprise Singapore Loans, until September 2021. With the extension, the government will lower its loan risk-share from 90% to 70%. The maximum loan quantum will be lowered from S$5 million to S$3 million.

Enterprise Financing Scheme

Under the Enterprise Financing Scheme, support will be adjusted to help firms access financings in areas such as trade and project needs.

The Enterprise Financing Scheme - Trade Loan will be extended until September 30, 2021.  The government will lower its risk-share from 90% to 70%, but maintain the maximum loan quantum at S$10 million. To enable enterprises to access trade loans more readily, the Loan Insurance Scheme will be streamlined into this loan from April 1, 2021.

In support of the construction sector, the Enterprise Financing Scheme - Project Loans will be extended to construction companies financing secured domestic projects (in addition to overseas projects). The extension will run from January 1, 2021 to March 31, 2022.

The Government will provide 50% risk-share for loans made by participating financial institutions. This figure may increase to 70% for young companies, with the maximum loan quantum at $$30 million.

For the full transcript of the Oct 2020 Ministerial Statement, please visit the Singapore Budget website.