Rejection Rates for SME Working Capital Loan Programme
Ministry of Trade and IndustrySpeakers
Summary
This question concerns the rejection rates and alternative support for the SME Working Capital Loan Programme, as raised by Mr Thomas Chua Kee Seng. Minister for Trade and Industry (Industry) S Iswaran reported that the scheme catalysed over $700 million for 4,300 SMEs by December 2016, with a success rate of 80% to 85%. Common rejection reasons include poor financial track records, lack of profitability, or adverse personal credit bureau records. Minister for Trade and Industry (Industry) S Iswaran noted that SMEs can seek alternative financing like factory loans, trade financing, or venture lending. He further emphasized using government schemes for capability building and internationalisation to ensure long-term business growth.
Transcript
24 Mr Thomas Chua Kee Seng asked the Minister for Trade and Industry (Industry) since the launch of the SME Working Capital Loan Programme in June 2016 (a) how many SMEs' applications under the programme have been rejected; (b) what are the reasons for these rejected applications; and (c) what other Government financing assistance can such SMEs seek.
Mr S Iswaran: The SME Working Capital Loan was announced at Budget 2016 to help viable SMEs access working capital and continue growing their businesses. The scheme complements existing Government loan schemes and commercial loans offered by financial institutions. SPRING works through Participating Financial Institutions (PFIs), which evaluate the applications for the SME Working Capital Loan.
Since the launch of the SME Working Capital Loan in June 2016, more than $700 million in loans has been catalysed, benefiting about 4,300 SMEs as of end December 2016. This represents a success rate of about 80% to 85%. Common reasons for unsuccessful applications are that the SMEs have poor financial track records, such as lack of profitability, or that owners have adverse individual credit bureau records1, such as late payments on personal loans.
Besides the SME Working Capital Loan, the Government partners PFIs to make loans available to viable SMEs with different needs. The loans offered include factory and equipment loans and trade financing and complement the commercial loans offered by these PFIs. Besides traditional bank financing, SMEs can also tap alternative financing platforms like venture lending.
Beyond the immediate financing needs, SMEs should continue to develop capabilities to transform their businesses to remain competitive and achieve continued growth. SMEs who require assistance in their growth can tap on a suite of Government schemes which can support them in building capabilities, scaling up and internationalisation.