ENVIRONMENTAL engineering firm WaterTech turned to Spring Singapore when it needed working capital to expand its business in China.

Spring took up an equity investment in the firm, and introduced WaterTech to a business mentor and some angel investors. The investors not only provided more funding but also helped to restructure the firm, sharpen its business model and strengthen its board of directors.

WaterTech has since secured several new contracts to build and manage wastewater treatment plants in China.

The firm was just one out of about 3,900 small and medium-sized enterprises (SMEs) which received support and funding from Spring last year.

Spring chief executive Png Cheong Boon told a media briefing yesterday that the agency supported some 3,800 projects last year, committing a total of $98 million in grants.

The projects covered a wide range of areas, such as productivity improvement, technology innovation, service excellence, business leader and human capital development and business capabilities upgrading.

When these projects are fully implemented within the next three years, the SMEs are expected to create more than 15,000 new jobs and generate an additional $4.4 billion in value-add for the economy, Mr Png said.

SMEs took up fewer government loans last year than in 2010, he added.

Some 5,100 loans amounting to $1.4 billion were extended to SMEs under the various financing programmes administered by Spring's financial institution partners last year.

This is a sharp drop from 2010, when 9,748 loans worth $2.7 billion were extended to SMEs.

Spring chairman Philip Yeo said the fall in demand for government loans was due to the availability of easy credit last year.

'The banks were quite willing to loan and were flush with cash.'

But whether SMEs will need more government funding this year in the face of a tightening credit market remains to be seen, he added.

'So far this year we have not heard any complaints from companies about financing problems. If the banks are willing to loan and they are doing it then there's no need for us to worry.'

For many SMEs, the main challenge they foresee this year is a lack of manpower, which will constrict growth.

Managing director of Singapore-based offshore equipment manufacturer Rotating Offshore Solutions (ROS), Mr Victor Lim, said: 'We have no problems getting orders. In fact, we project that the company's revenue could potentially double this year, but we are afraid to take in all the orders that are coming in, because we might not have enough labour to execute all the orders.'

The solution, he said, would be to automate more of the company's operations, which ROS is in the process of doing.

That is why this year, Spring plans to step up its efforts to encourage more SMEs to improve their productivity and pursue innovation, so that they can continue to grow amid a slower economic environment and tighter labour market.

'We want to work in partnership with the trade associations especially in terms of reaching out to micro-enterprises,' said Mr Png.

'For some industries, we saw that there needs to be a concerted effort to upgrade the industry and possibly even to restructure, moving up the value chain.'