[2023] Enterprise Financing Scheme (EFS)
Whether you are planning to develop new capabilities, create new products or expand your business footprint overseas, having access to the right financing is crucial to realise your growth ambitions by getting a working capital loan.
What is Enterprise Financing Scheme (EFS)?
The Enterprise Financing Scheme (EFS) streamlines eight financing schemes into one single umbrella. With common eligibility criteria and a single application platform, the EFS aims to help participating financial institutions (PFIs) and enterprises easily navigate between the various financing schemes. Thus, the EFS will provide comprehensive support for enterprises’ financing requirements across different stages of growth, for both domestic and overseas activities.
Importantly, with effect from 29 Oct 2019, Enterprise Singapore’s existing financing schemes will be streamlined into one umbrella scheme known as the Enterprise Financing Scheme (EFS). EFS will enable Singapore enterprises to access financing more readily throughout their various stages of growth.
With the introduction of the EFS, ESG will discontinue the eight existing financing schemes, namely the
- SME Equipment Loan,
- SME Factory Loan,
- SME Working Capital Loan,
- SME Micro Loan,
- SME Micro Loan for Young Companies,
- SME Venture Loan,
- Internationalisation Finance Scheme and
- Loan Insurance Scheme Plus
These financing schemes were carried over from former SPRING and IE Singapore and will be relaunched as the EFS, managed by Enterprise Singapore.
Enterprise Singapore will share the loan default risk in the event of enterprise insolvency with the Participating Financial Institutions. The EFS will cover the following six areas to address enterprises’ financing needs:
- SME Working Capital – For day to day business operations
- SME Fixed Assets – Buy business properties, commercial vehicles, equipment, vessels, land
- Venture Debt – Debt financing with warrants for high growth enterprises in between equity financing rounds
- Trade – To finance domestic and overseas markets
- Project Loan– To secure and execute overseas projects or orders
- Mergers & Acquisitions – To merge with or acquire other enterprises
A higher risk share will be considered for the following:
- a) Young companies within 5 years from inception; and
- b) Selected markets with Standard & Poor’s (S&P) ratings of below BBB- or are not rated.
More information can be found on https://www.mti.gov.sg/-/media/MTI/COS-2019/Factsheet_EFS.pdf
1)SME WORKING CAPITAL LOAN¹
Finance daily operational cashflow needs.
- Maximum Loan Quantum: S$300,000 / borrower
Note Overall loan exposure limit of S$50 million per borrower group across all areas.
- Maximum Loan Repayment Period: 5 Years
- Risk Share: Enterprise Singapore will co-share up to 50% of loan default risk with the Participating Financial Institution in the event of enterprise insolvency; Risk share can be increased up to 70% for young enterprises².
- Interest Rate: Subject to Participating Financial Institutions’ assessment of risks involved.
SME Working Capital loan did not have any changes compared to the past, it still enables SMEs to borrow up to $300k of ‘Risk-Sharing” loan from all Participating Financial Institution. This means that SMEs can still enjoy a discounted rate of business loan for up to $300k.
For more information on Working Capital Loan:
Please visit sgsmeloans.com.sg to find out more!
2)SME FIXED ASSETS LOAN¹
Finance the investment of domestic and overseas fixed asset, including:
- Purchase of equipment and machines for automation and upgrading
- Construction or purchase of government and commercial built factories and business premises
- Maximum Loan Quantum: S$30 million / borrower group
Note Overall loan exposure limit of S$50 million per borrower group across all areas.
- Maximum Loan Repayment Period: 15 Years
- Risk Share: Enterprise Singapore will co-share up to 50% of loan default risk with the Participating Financial Institution in the event of enterprise insolvency; Risk share can be increased up to 70% for young enterprises². Risk share will be 70% for fixed assets in markets with Standard & Poor’s (S&P) ratings of below BBB- or are not rated.
- Interest Rate: Subject to Participating Financial Institutions’ assessment of risks involved.
3)VENTURE DEBT LOAN
Finance the growth of innovative enterprises using Venture Debt and Warrants.
This form of financing is typically suited for high growth start-ups that do not have significant assets to be used as collateral under traditional bank lending. The warrants, or rights to purchase equity, is to compensate for the higher risk of loan default.
Enterprises may use the Loan to:
- Grow and expand existing capacity
- Diversify into other product lines
- Augment working capital needs
- Undertake new projects
- Undergo merger and acquisitions
- Maximum Loan Quantum: S$5 million / borrower group
Note Overall loan exposure limit of S$50 million per borrower group across all areas.
- Maximum Loan Repayment Period: 5 Years
- Risk Share: Enterprise Singapore will co-share up to 50% of loan default risk with the Participating Financial Institution in the event of enterprise insolvency; Risk share can be increased up to 70% for young enterprises².
- Interest Rate: Subject to Participating Financial Institutions’ assessment of risks involved.
4)TRADE LOAN
Finance Import, Export and Guarantee needs, including:
- Inventory / stock financing
- Structured pre-delivery working capital (revolving working capital)
- Factoring (with recourse) / bill of invoice / AR discounting
- Overseas working capital loan
The Trade Loan covers enterprises’ domestic and overseas transactions. It also compliments the current Loan Insurance Scheme (LIS) through the Government insuring loans which are beyond the capacity of current LIS insurers, thereby enhancing enterprises’ access to larger quantum of financing.
- Maximum Loan Quantum: S$5 million / borrower group
Note Overall loan exposure limit of S$50 million per borrower group across all areas.
- Maximum Loan Repayment Period: 1 Year
- Risk Share: Enterprise Singapore will co-share up to 50% of loan default risk with the Participating Financial Institution in the event of enterprise insolvency; Risk share can be increased up to 70% for young enterprises².
- Interest Rate: Subject to Participating Financial Institutions’ assessment of risks involved.
For more relevant information on trade loan:
Please read up on Letter Of Credit and also Invoice Financing.
5)PROJECT LOAN
Finance the fulfilment of secured overseas projects. The supportable loan types include:
- Working capital and trade loans
- Equipment/ machineries/ vessels/ other fixed assets
- Guarantees
- Maximum Loan Quantum: S$50 million / borrower group
Note Overall loan exposure limit of S$50 million per borrower group across all areas.
- Maximum Loan Repayment Period: 15 Years
- Risk Share: Enterprise Singapore will co-share up to 50% of loan default risk with the Participating Financial Institution in the event of enterprise insolvency; Risk share can be increased up to 70% for young enterprises². Risk share will be 70% for fixed assests in markets with Standard & Poor’s (S&P) ratings of below BBB- or are not rated.
- Interest Rate: Subject to Participating Financial Institutions’ assessment of risks involved.
6)MERGERS & ACQUISTIONS LOAN
Finance the acquisition of local or overseas target enterprises, with the intent of internationalization.
- Maximum Loan Quantum: S$50 million / borrower group
Note Overall loan exposure limit of S$50 million per borrower group across all areas.
- Maximum Loan Repayment Period: 5 Years
- Risk Share: Enterprise Singapore will co-share up to 50% of loan default risk with the Participating Financial Institution in the event of enterprise insolvency; Risk share can be increased up to 70% for young enterprises². Risk share will be 70% for fixed assests in markets with Standard & Poor’s (S&P) ratings of below BBB- or are not rated.
- Interest Rate: Subject to Participating Financial Institutions’ assessment of risks involved.
¹ For “SME WORKING CAPTIAL” and “SME FIXED ASSETS,” SMEs refer to companies with a group revenue of $100 million or maximum employment of 200 employees
² Young Enterprises refer to firms formed within the past 5 years with at least 1 employee, and more than 50% equity owned by individuals.
HOW TO QUALIFY FOR EFS?
- BE A BUSINESS ENTITY THAT IS REGISTERED AND PHYSICALLY PRESENT IN SINGAPORE
- HAVE AT LEAST 30% LOCAL ENTITY HELD DIRECTLY OR INDIRECTLY BY SINGAPOREAN(S) AND/OR SINGAPORE PR(S), DETERMINED BY THE ULTIMATE INDIVIDUAL OWNERSHIP
- HAVE A MAXIMUM BORROWER GROUP REVENUE CAP OF $500 MILLION FOR ALL COMPANIES
Sources from:
https://www.enterprisesg.gov.sg/
https://www.enterprisesg.gov.sg/financial-assistance/loans-and-insurance/loans-and-insurance/enterprise-financing-scheme/overviewBizSquare is a one-stop business consultancy firm providing Loan Consultancy Services, Accounting and Corporate Secretarial Services, Branding and Marketing Consultancy, Strategy Management and Start-up Mentorship.
