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Reduced Grant Funding Support For Productivity Solutions Grant (PSG) and Enterprise Development Grant (EDG), What It Meant For SMEs In Singapore?
In order to enhance their company operations and broaden their clientele, Singapore's small and medium-sized firms (SMEs) have long depended on government grant programs like the Productivity Solutions Grant (PSG) and the Enterprise Development Grant (EDG).
Many SMEs are unsure of what this implies for their companies as a result of recent changes in government financing rules that have resulted in a decline in grant funding support for these initiatives. The effects of less grant funding support for the PSG and EDG on SMEs in Singapore will be discussed in this blog.
We'll look at these grant programs' main characteristics, the advantages they offer, and how the funding cut can impact SMEs. Also, we'll go through various coping mechanisms for Businesses and look into alternative funding sources.
Understanding the Productivity Solutions Grant (PSG)
The Productivity Solutions Grant (PSG) is a government grant program in Singapore that aids SMEs in implementing technological solutions to raise productivity and efficiency levels in their operations. Among the many business issues supported by the grant are accounting, inventory management, human resource management, and customer relationship management.
With the help of the PSG program, SMEs may implement pre-approved productivity solutions for up to 70% (current grant financing support) less than their qualifying expenses. The goals of these solutions are to increase productivity, lower expenses, and boost market competitiveness. The cost of the hardware, software and services required to put the productivity solutions into practice is covered by the PSG grant.
For businesses that might lack the finances to invest in technology and digitization, the PSG grant is very helpful. Several SMEs in Singapore have benefited from the program's assistance in overcoming the cost barrier and implementing new technology to improve business operations.
The Enterprise Development Grant (EDG) and Its Role in Supporting SMEs
Another government grant program in Singapore that gives grant support to SMEs to help them build and expand their enterprises is the Enterprise Development Grant (EDG). The program is meant to help firms in three crucial areas: market access, innovation and productivity, and human capital development.
For SMEs to carry out eligible projects, the EDG program offers financial support of up to 70% (current grant financing support) of the qualifying expenditures. These initiatives might involve the creation of brand-new goods or services, the use of cutting-edge technology, or the extension of commercial activities into untapped areas. Several eligible expenses, including consulting fees, hardware and software expenditures, and costs associated with outside vendors, are covered by the EDG grant.
The EDG grant is especially helpful for SMEs wishing to develop and expand their enterprises since it gives them the resources they need to take on projects that might be beyond their financial reach. Several SMEs in Singapore have benefited from the program's assistance in developing new goods and services, entering new markets, and improving their competitiveness.
Impact of Reduced Grant Funding Support on SMEs in Singapore
The PSG and EDG programs in Singapore may be significantly impacted by the decline in grant funding assistance. SMEs may find it more difficult to adopt the required productivity measures and carry out the qualifying projects that are crucial for business growth and development if there is less cash available.
One of the biggest effects of less grant money is that SMEs could have to postpone or cut back their initiatives. Delays can result in missed opportunities and lost market share, which can be particularly troublesome for SMEs that compete fiercely for customers.
Strategies for SMEs to Navigate the Reduction in Grant Funding Support
While the reduction in grant funding support for the PSG and EDG programs in Singapore can present challenges for SMEs, there are still strategies that businesses can use to navigate the situation effectively. Here are some strategies that SMEs can consider:
Investigate other funding choices: To assist their business operations and growth, SMEs can look into alternative funding options such as Government Assisted Loan -Working Capital Loan (WCL). SMEs may find the most appropriate financing solutions for their requirements and establish a financing strategy that supports their long-term growth and development by applying for WCL at below-market interest rates.
Prioritize projects: With the reduction in grant funding, SMEs may need to select projects and focus on those that will have the most influence on their business operations and growth. Prioritizing their projects allows SMEs to make the most use of their existing resources while also reaping the advantages of the PSG and EDG programs.
Leverage existing resources: SMEs can also use current resources inside their company to help their business operations and growth. SMEs can find chances for process improvement and cost savings by fostering employee creativity and innovation, which can improve their business operations without needing considerable financial investment.
Partner with other firms: Working with other businesses can also be a valuable option for SMEs when grant financial assistance is reduced. Businesses can collaborate to share resources, information, and skills to produce creative solutions that benefit all parties involved.
Concentrate on long-term growth: Lastly, SMEs must prioritize long-term growth and development over short-term benefits. Businesses may position themselves for long-term success and overcome the hurdles provided by reduced grant funding assistance by taking a strategic approach to their company operations and growth.
What Might Be The Reason For This Reduced Funding?
Generally speaking, governments may lessen grant assistance for several reasons, such as:
Fiscal Constraints: When facing financial challenges and being forced to focus expenditures on more important areas, governments may restrict grant funding.
Change in Policy Priorities: Governments may alter their policy goals, which might result in a reallocation of funding away from grant assistance and toward other projects or programs.
Assessment of Effectiveness: When deciding whether to cut funding for grant programs that have not been successful in producing the desired results, governments may analyze the efficacy of grant programs.
Budget Realignment: Governments may realign their budgets to more closely fit with their strategic aims and objectives, which might lead to a decrease in grant funding for some industries or programs.
What Are The Other Grants That Are Affected By The Reduced Grant Funding Support?
Starting on April 1, 2023, SMEs are eligible for up to 50% of the MRA grant's funding. Up to the 31st of March 2025, the increased award maximum of up to S$100,000 will remain in effect.
History Of Market Readiness Assistant (MRA) Grant
Market Readiness Assistant (MRA) is a government grant that helps Singapore's SMEs extend their operations into a new foreign market. Up to S$100,000 can be provided in support of each new market.
The MRA grant support level of up to 70% will be extended until 31 March 2023. From 1 April 2023, SMEs can receive up to 50% support for the MRA grant. The enhanced grant cap of up to S$100,000 will be extended until 31 March 2025.
Given the severe disruptions caused by the COVID-19 pandemic, the increased grant assistance levels were prolonged for a certain amount of time in order to promote economic change and aid enterprises in overcoming the epidemic.
Eligible SMEs will receive the following support:
- Up to 70% of eligible costs, capped at S$100,000 per company per new market* from 1 April 2020 to 31 March 2023 covers:
- Overseas market promotion (capped at S$20,000)
- Overseas business development (capped at S$50,000)
- Overseas market set-up (capped at S$30,000)
- Each application is limited to one activity (e.g. market entry, or participation in a trade fair)
Read also: Singapore SMEs: Ready for Overseas Expansion with the MRA Grant
Senior Worker Early Adopter Grant (SWEAG) and Part Time Re-Employment Grant (PTRG)
On December 31, 2022, the senior worker grant and part-time re-employment grant applications were temporarily halted.
At the introduction of the 2023 Action Plan for Successful Aging, the Ministry of Manpower (MOM) announced the extension of the Part-Time Re-employment Grant (PTRG) from 2023 to 2025. This message was emphasized in Budget 2023, and further information will be released as part of MOM's COS 2023.
The extension of the Part-time Re-employment Grant (PTRG) until 2025 would not only assist firms to fulfill their personnel demands, but will also help offset business expenditures for older workers.
There has been no update on what the new PTRG grants would contain, but one thing is certain: there will be no senior worker grant (SWEAG).
Subscribe to our email list or telegram group for additional information as it becomes available.
Read also: New Update: What You Need to Know About the Senior Worker Support Package 2022: Up to S$250,000 Grants for Companies
Which Grants Still Enjoy Higher Grant Funding Support?
Energy Efficiency Grant (EEG)
By co-funding investments in more energy-efficient equipment, the Energy Efficiency Grant (EEG) intends to assist firms in the food services, food manufacturing, or retail sectors in managing growing energy costs.
For Businesses to adopt pre-approved energy-efficient equipment in the following categories: LED lights, air conditioners, cooking ranges, freezers, water heaters, and clothes dryers, the EEG will offer up to 70% of the necessary support. The maximum amount of grant support for eligible expenses will be S$30,000 per firm per year.
Note that Energy Efficiency Grant (EEG) is a separate scheme from the Productivity Solutions Grant (PSG).
SkillsFuture Enterprise Credit (SFEC)
Employers are encouraged to engage in company transformation and personnel capacities through the SkillsFuture Enterprise Credit (SFEC). Over and beyond the support levels of current programs, eligible employers will get a one-time S$10,000 credit to cover up to 90% of out-of-pocket costs on qualifying costs for supportable projects.
Finally, the reduction in grant funding assistance for Singapore's PSG and EDG programs can have a substantial impact on SMEs. It is crucial to stress, however, that the government's decision to limit grant funding support was taken after a thorough analysis of economic conditions and the need to balance support for SMEs with other priorities.
While the reduction in grant financial assistance may pose issues for SMEs, it also provides a chance for enterprises to examine their operations and find development opportunities. SMEs may position themselves for long-term success by taking a strategic approach to their business operations and growth, especially in the face of diminished grant financial assistance.
To effectively handle the circumstances, SMEs should also investigate alternate funding possibilities, prioritize their initiatives, harness existing resources, connect with other firms, and focus on long-term growth. SMEs may position themselves for success and continue to contribute to the growth and development of the Singapore economy by taking proactive actions to adapt to the changing environment.
While the reduction in grant funding assistance for the PSG and EDG programs may provide problems, SMEs must remain resilient and adaptive in the face of change. SMEs may manage the crisis successfully and emerge stronger and more competitive in the long term if they have the correct tactics and mentality.
Frequently Asked Questions
What is the difference between EDG and PSG grants?
PSG encourages the adoption of IT solutions and equipment to enhance business processes, which helps the digital transformation and further digitalization of Singapore firms. EDG, on the other hand, is not restricted to digitalization but encompasses a wider spectrum of business upgrading solutions.
How do I make a claim under Productivity Solutions Grant?
A Step-By-Step Guide can be found here.
Read also: Complete Guide To EDG Strategic Brand And Marketing Development Grant - What Are Claimable? *Updated'
Read also: Career Conversion Programme (CCP) For SME Executives- Up to 90% Salary Support For Newly Hired
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