Jenn Jong is suggesting a government led financing for SMEs in Singapore. What are your thoughts on this?
Committee of Supply Cuts by YJJ on Ministry of Trade and Industry
The service economy is increasingly important to Singapore. Excluding Financial and Insurance, the service sector had 135,000 enterprises and employed 1.35 million workers in 2010.
The 2012 SME Development Survey highlighted that 50% more service sector SMEs found bank financing a challenge compared to the previous year. This is despite the availability of government-backed loans through financial institutions. The survey also found more SMEs facing cash flow problems and worsening liquidity.
Service sector SMEs generally require working capital financing such as supplier invoice financing, working capital term loans and factoring. They are generally asset light with little collaterals. Financial institutions are cautious and tend to make unsecured lending only to bigger mid-sized SMEs. With the Basel III minimum adequacy requirement, banks are likely to tighten loans to smaller and riskier SMEs.
Government lending to SMEs has…
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