When it comes to running your own business, there are several options you can consider in Singapore to get your business up and running. This is where you want to find sources that can offer you funds so that you can have a stress-free business.
Funding your business options
Singapore is one of the most exciting places in the world to set up your own business or entrepreneurial project. It offers low tax rates and is one of the easiest places in the world to start a business which is why a lot of practitioners come here to start their setups. But you will need to have funds as startup capital and approaching a bank would be your easiest bet. However, getting a bank loan means you start with a commitment which can be quite daunting. You should therefore consider all other options besides taking the easy way out through a bank.
Government Offered Funds
The government of Singapore offers several options for business funding as part of its initiative to grow this sector. When you are a startup company, you can apply for these grants and schemes as long as you meet the conditions. They are as follow:
- Business incubator schemes
- Government-aided equity financing schemes
- Cash grants
- Debt financing schemes
Startup SG is a program by SPRING or otherwise known as the Standards, Productivity and Innovation Board Spring. This is a program that resulted from the consolidation of the previous schemed offered by SPRING. The idea behind Startup SG is to offer companies a range of resources to help them get started. Besides providing the access to funding sources, there are other initiatives like mentorship programs and such.
Business Incubation Schemes
This type of business funding comes not entirely in monetary form but in other ways like guidance and mentorship. Such schemes are common for startups where a physical space is provided to help the business start and to grow its ideas. On top of that, they get to enjoy share services and some form of financial aid to kickstart their projects. Among the initiatives offered in this include:
- NRF Technology Incubation Scheme
- Incubator Development Program
- Incubator for Disruptive Enterprises and Start-ups (IDEAS) Fund
- Fast-Track Environmental and Water Technologies Incubator Scheme (Fast-Tech)
Equity Financing Schemes
This refers to the type of business funding where investors pump capital into the business for a share in the company, usually for ownership. Startups will like this type of investment especially in the early states. Among the common equity financing for businesses are:
Startup SG Equity
This is an investment fund initiative which is offered by SPRING Seeds Capital together with SGInnovate. The government will co-invest with 11 investment partners from the private sector into new businesses that need a lot of capital. On top of that, it involves businesses that might not be commercially viable in the short term. In fact, the government will offer up to 70% of the funding for startups involved in improving existing technologies. This will be about SGD250,000. After that, a SGD1 will be invested for ever coinciding SGD1 by private investors up to SGD2,000,000.
Meanwhile, the government will invest 70% into ‘deep tech’ startups which starts at around SGD500,000 and the SGD1:SGD1 investment up to SGD4,000,000. How to be eligible for this? To apply for this, you company:
- must be Singapore-based
- have your core operations in Singapore
- must be a private limited company not more than 5 years
- have at least SGD50,000 paid-up capital
- and others
Business Angels Scheme
Known in short as BAS, it is organized by SPRING SEEDS Capital as well. The government agency will co-invest in startups that are involved in growth-oriented and innovative Singaporean firms. It provides pre-approved business angels with dollar-to-dollar matches up to SGD1,500,000.
Early-Stage Venture Funding Scheme
The Early-Stage Venture Funding Scheme or EVFS comes under the purview of the National Research Foundation (NRF). The NRF will invest SGD1 for every SGD1 invested by third-party investors in this co-funding scheme. Technology start-ups who qualify can approach the firms for funding of up to SGD3,000,000.
Business grants across Singapore are offered by both government agencies and private firms. There are several grants involved and offered which come with their own requirements. How it works is that grants usually cover only a percentage of what the business need. Among the grants that are available are as follow:
ACE Start-Ups Scheme
ACE is one scheme that does not take any equity for offering the grant. It is operated by ACE or Action Community for Entrepreneurship. The entrepreneur will receive SGD7 for every SGD3 raised of up to SGD50,000.
Technology Enterprise Commercialization Scheme
Known as the TECS, it is a grant under the purview of the IDA or Infocomm Development Authority and SPRING Singapore. This grant helps to fund new technology startups.
iSTART: ACE Scheme
This tands for Accelerate & Catalyse Entrepreneurship where it is a grant scheme that helps to accelerate technology commercialization and to help go-to-market activities for startups using technologies that are already established.
As the name implies, this type of funding helps businesses to start without having to compromise on their earnings. In other words, it is the type of borrowing very similar to banks. When you take out a debt-financing scheme, you are taking a loan fully on your own where you maintain full ownership of the business. However, you must pay your debts on time regardless of whether your business is making money. Among the sources where this is available include:
This is by far the most straightforward type of debt-financing schemes. Most of the banks in Singapore offer such loan in one way or another like DBS, OCBC and others. In most cases, you need to offer some form of collateral before the loan can be approved and you will have to decide on the total repayment schedule.
This is offered via various banks and financial institutions across Singapore. If you meet the requirements, you are eligible to borrow up to SGD100,000 and you can borrow this amount for reasons like upgrading of equipment or for daily operations. The interest rate is 5.75% minimum for a maximum of 4 years.
Loan Insurance Scheme
The LIS or Loan Insurance Scheme is a scheme that insures the business from risk of default. This is offered to startups by governments on a co-sharing basis and can be applied by firms with both local and oversea operations. The LIS does not come with a maximum loan quantum where the figures are usually determined on a case-by-case basis. Factors like interest rates and loan tenure are determined based on the risk and profile of the borrowed.
Local Enterprise Finance Scheme
The Local Enterprise Finance Scheme or LEFS involves banks and financial firms that offer funds mainly in factory-based businesses. The interest rate is 4.75% minimum and usually not more than 4 years. For the loan tenure of more than 4 years, the interest rate is not less than 5.25%. in fact, companies can apply for up to SGD15,000,000 for reasons like purchasing of business premises, equipment, upgrading of machineries and others.