Financial Assistance Schemes
Contributed by: RSM Chio Lim ( www.RSMChioLim.com.sg)
Choosing the right financing option is critical to a business. Entrepreneurs need to plan carefully, weigh the pros and cons of the various options, and choose those that are most suited to their stage of growth.
The Government plays a key role in supporting local businesses and their financing requirements by providing various forms of financial assistance to help businesses at different stages of growth. The table below provides an overview of financing schemes, grant schemes, tax incentive schemes and supporting programmes. Due to the changing terms and conditions governing the schemes, readers are encouraged to check the websites provided for any updates.
Debt Financing Schemes Micro Loan Programme
The maximum loan amount under this programme is S$50,000. Businesses can choose between a fixed interest (6.25% per annum) or variable interest rate loan. The loan repayment period is up to 4 years.Related links: www.spring.gov.sg
Local Enterprise Finance Scheme (LEFS)The scheme offers loans of up to S$15 million.
Related links:www.business.gov.sg Loan Insurance Scheme (LIS)
This scheme provides loan insurance to secure loans against default. The government will share the cost of the insurance premium with the borrower.Related links: www.spring.gov.sg Internationalisation Finance Scheme (
This is an asset-based loan, or structured loan based on the value of sales order/contract amount/project value, up to a maximum loan amount of S$15 million.Related links: www.iesingapore.com
Equity Financing SchemesBusiness Angels Scheme (
For every S$1 invested by Business Angel Funds under
Targeted at non-technology-based businesses, SPRING Singapore will match S$1 for every S$1 raised from private investors, up to a maximum of S$300,000 for this scheme. The minimum investment by private investors must be at least S$75,000.Related links: www.spring.gov.sg
Enterprise FundThis scheme works in the form of financial participation from S$1 million to S$3 million, usually structured as convertible loans or debts with equity options with pre-defined repayment tenures.
Related links:www.business.gov.sg Growth Financing Programme (GFP)
Every S$2 raised from third party investors will be matched by S$1 from SPRING Singapore, up to a maximum of S$1 million. The minimum investment amount from third party investors must be S$500,000.Related links: www.business.gov.sg
GrantsPatent Application Fund Plus (PAF Plus)
This grant is for the purpose of defraying the costs of patent application.Related links: www.business.gov.sg
Innovation Development Scheme (
Locally-based Enterprise Advancement Programme (
Local Industry Upgrading Programme (LIUP)This grant provides support for local suppliers to upgrade through collaborations with MNCs.
Related links:www.edb.gov.sg Tax Incentives
Tax Exemption for Start-upsStart-ups are granted tax exemption on the first S$100,000 of chargeable income (excluding Singapore franked dividends) for any of the first 3 consecutive years of tax assessment falling within Years of Assessment 2005 to 2009.
Enterprise Investment Incentive Scheme (EII)This scheme aims to help start-ups attract more investments as investors can deduct up to S$3 million of losses against their taxable income.
Pioneer Incentive (PC-M or PC-S)Tax exemption on qualifying profits is granted up to 15 years for projects that result in the creation of new industries or the strategic expansion of existing industries in Singapore.
Industrial Exemption Factory Scheme100% tax exemption for two years on dutiable raw materials for high-end industries is granted.
Zero GST Warehouse SchemeThis scheme aims to improve a company’s cash flow by allowing a suspension of GST during storage of non-dutiable goods in licensed warehouses until they are released for local consumption.
Investment Allowance (IA)A tax incentive serving as a further capital allowance on qualifying equipment costs incurred within a set period will be given.
Development and Expansion Incentive (DEI)This tax incentive provides preferential corporate tax rate on all qualifying profits above a predetermined base, for a set period.
Related link:www.edb.gov.sg Licensed Warehouse Scheme (LWS)
The main advantage of this scheme is that duty and taxes (GST) are suspended in Licensed Warehouses until the imported dutiable goods are removed from the premises and enter the local market for consumption.Related link: Global Trader Programme (GTP)
The scheme provides companies with a concessionary tax rate of not more than 10% on offshore trading income from qualifying commodities and products.Related link: Double Deduction for Overseas Investment Development Expenditure (DD)
This scheme allows for double deduction of expenses that are not deducted under Section 14 of the Income Tax Act, and a further deduction of expenses (that are deductible under Section 14 of the Income Tax Act) against income of approved expenditure in activities to start or develop overseas investments. The maximum amount of eligible expenses allowed for deduction under this scheme is S$200,000 per approval.Related links: www.iesingapore.com
Overseas Investment Incentive (
Overseas Enterprise Incentive (
Related links:www.business.gov.sg Regional/International Headquarters Award (RHQ/IHQ)
Companies under this scheme can enjoy a customised package of tax incentives or grants including a concessionary tax rate of 15% on incremental qualifying income from abroad for 5 years.Related links: www.business.gov.sg
Double Tax Deduction for Market Development (DTD)This scheme allows for deduction of twice the level of approved expenses for approved projects against the company’s taxable income.
Related links:www.business.gov.sg Expansion Incentive for Partnerships (EIP)
Tax exemption is granted for 50% of the qualifying overseas income of professional services companies above a pre-determined base.Related link: Supporting Programmes
Trade Credit Insurance (
Related links:www.business.gov.sg Warehouse Retail Scheme
The scheme assists businesses to achieve savings and productivity gains from co-location of various functions in one centralised location.Related link: International Partners Programme (iPartners)
The scheme promotes co-funding to defray a percentage of costs, and requires the alliance of a leading industry player with strong access to overseas markets, and at least 2 other companies with complementary services, products, capabilities or technology.Related links: www.iesingapore.com
Local Enterprise Technical Assistance Scheme (LETAS)Companies will be given a subsidy of up to 50% of the cost of hiring external consultants to implement quality management and IT systems.