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SINGAPORE BUDGET 2021: What SMEs Need To Know
Last year saw Singapore suffer its worst economic recession since independence. The global pandemic caused by COVID-19 led to the economy shrinking by 5.4 per cent. To combat the debilitating effects of the coronavirus, in terms of both the public health crisis and the resulting economic fallout, the Singapore government drew an unprecedented S$52 billion from the reserves last year.
Over five Budgets pushed out last year, including two supplementary budgets, almost S$100 billion was spent on support measures to assist businesses and jobs for individuals. This has gone a long way to help cushion the blow of the pandemic. Indeed, the Monetary Authority of Singapore (MAS) estimated that the economy could well have shrunk by more than 12 per cent in 2020 if these support measures had not been implemented.
As such, with the understanding that we have crossed in 2021 on a better standing, much attention and anticipation has been placed on the first Budget announced yesterday, dubbed the “Emerging Stronger Together Budget”, to see how the government will be approaching the need to further aid the country’s recovery:
1. Enhanced Enterprise Development Grant (EDG)
Then: Announced in October 2020, the increase in funding support level from 70% to 80% from 1st November 2020 to 30th September 2021.
Now: In the recent 2021 Budget, the extended EDG support level of up to 80% will be extended from 30th September 2021 to 31st March 2022
Enhanced Market Readiness Assistance (MRA) Then: MRA Grant support level of up to 80% expired on 30th Sept 2021
Now: Enhanced Market Readiness Assistance support levels of up to 80% to be extended for further 6 months till 31st March 2022 Trade Credit Insurance (TCI) will be supported as a qualifying cost under MRA from 1st April 2021 to protect SMEs against buyer default
100% Investment Allowance (Automation Support Package) Then: To support SMEs usage of automation and technology, SMEs can claimed up to 80% of qualified costs such as:
1. Adoption/ Development of sophisticated hardware and/or software solutions
2. Development of solutions that involve purchase of machinery and integration of systems
3. Training of staff to deploy solution
From 1st April 2020 to 30th September 2021
Now: 100% investment allowance extended to 31st March 2023
2. Productivity Solutions Grant (PSG) Then: The Productivity Solutions Grant supports SMEs keen on adopting IT solutions and equipment to enhance business processes.
It was increased from 70% to 80% support levels to 30th September 2021.
Now: It was further extended to another 6 months till 31st March 2022
And no, the popular PSG remote working solution - Laptop grant under remote working solutions is still no longer available.
3. Enhanced Enterprise Financing Scheme (EFS) Then: Temporary Bridging Loan of up to S$5 million and Enhanced Working Capital Loan of Up to S$1 million to help SMEs better access to working capital requirements during COVID-19 Period.
Now: Temporary Bridging Loan amount will be revised to S$3 million from 1st April 2021 to 30th Sept 2021.
Risk Sharing will reduce from 90% to 70% by Enterprise Singapore thus Financial Institutions will most likely impose stringent assessments and lower quantum come April 2021.
Enhanced Working Capital Loan will be a permanent feature under EFS and more information will be announced soon. (Subscribe to our Telegram Channel for updates!)
New Venture Debt Programme will be launched on 1st April 2021 to have maximum supportable loan quantum increase from S$5 million to S$8 million.
The venture debt scheme is curated typically for high growth start-ups with the warrants and rights to purchase equity to mitigate loan default risks. (Risk sharing is on 50% and 70% for Young companies less than 5 years old and at least 50% equity owned by individuals)
Apply For Your Temporary Bridging Loan Here!
Read also: 8 Possible Reasons Why Your SME Business Loan May Be Rejected
4. Extension of Job Support Scheme (JSS)
For businesses in the Tier 1 sector – Aviation, Aerospace, and Tourism – the JSS will be extended by a further six months. From April to June 2021, these businesses will receive 30% support for wages paid, which will subsequently be lowered to 10% from July to September 2021.
Those in Tier 2 sectors, such as Retail, Arts and Culture, Food services and Built environment sectors, will have the JSS extended at 10% for three months, covering wages paid up to June 2021. This excludes segments like supermarkets.
Read more about Job Support Scheme: COVID-19: 3 Key Things You Need To Know About Jobs Support Scheme JSS Payouts
Jobs Support Scheme: What Employers Need To Know To Avoid Getting JSS Payouts Denied
5. Extension of Job Growth Incentive (JGI)
Then: The Job Growth Incentive (JGI) is the latest scheme announced last year, and it aims to further promote local hires with a 12-month salary support scheme from September 2020 to February 2021.
Read more about Job Growth Incentive (JGI)
Now: Extended the JGI hiring window by another 7 months to 30th September 2021 and wage cap for employees enhanced from S$5,000 to S$6,000
6. S Pass Quota Reduction
From 1st January 2022, the manufacturing sector can have only up to 18% of their workforce to be foreign workers on S passes, and this will be further reduced to 15% from 1st January 2023. Currently, it is at 20%.
The S Pass quota for construction, process and marine shipyard firms will be further reduced to 15% from 1st January 2023.
SMEs can still retain their excess S Passes holders till their S Passes expire.
7. Wage Credit Scheme
The Wage Credit Scheme will be extended for a year, co-funding 15% of qualifying wage increases given this year. The scheme subsidises wage increases of at least S$50 for Singaporean employees, up to a gross monthly wage ceiling of S$5,000.
8. Senior Worker Support Package 2021
The new Senior Worker Early Adopter Grant provides support of up to S$250,000 for companies that are willing and able to raise both their retirement age and re-employment age ahead of the national schedule.
In addition, a new Part Time Re-employment Grant has also been introduced to provide up to S$125,000 to companies that commit to providing part time re-employment opportunities to senior workers who have requested for it.
Read more: What You Need to Know About the Senior Worker Support Package 2021: Up to S$375,000 Grants for Companies
It was ceased early this year due to over-subscription for this scheme but applications have now been resumed again following Budget 2021 announcement. Thus we encourage SMEs that have senior worker headcount to apply soonest.
Read also: Solidarity Budget: Support For Businesses During COVID-19
Read also: 8 Key Points You Need To Know From The Fortitude Budget 2020
Read also: Expired or Expiring Singapore SME Government Grants from 2020 (Will Budget 2021 Provide New Support?)
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