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Forum suggests different funding options for SMEs

Copyright 2014 Singapore Press Holdings Limited
 All Rights Reserved

SMALLER firms should have better access to financial education and different funding options, according to a research body.

The Global Forum for SMEs (small and medium-sized enterprises) said governments should look at initiatives in both areas to help smaller firms.

Help could come in the form of investing in infrastructure and policies to further education while policymakers could look at "new and different forms of funding", such as crowdfunding.

The forum, which was set up by the Association of Chartered Certified Accountants (ACCA), highlighted the leading United States equity platform Kickstarter, which raised US$480 million (S$607 million) last year.

Crowdfunding platforms typically campaign through channels such as social media to raise funds, and often provide more flexible terms than conventional funding sources like banks.

Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said in last month's Budget speech that equity crowdfunding is emerging "as an alternative source of financing" for SMEs in some countries. He said the Government is "studying the potential", and that the Monetary Authority of Singapore (MAS) and Spring Singapore are looking into a regulatory framework.

Mr Tharman also said in Parliament last year that firms have access to a "range of financing schemes", including the Local Enterprise Finance Scheme and the Angel Investors Tax Deduction Scheme, which encourages investment in Singapore companies.

This month's Global Forum report attributed the interest in alternative funding to a "loss of trust" in banks after the global financial crisis. It also said regulations have prevented banks from lending to SMEs.

However, preliminary statistics from the annual MAS SME Financing Survey found lending to SMEs from "major lenders" was up by 9 per cent in the year ending June 2013.

DBS executive director of SME banking Mok Kum Thong said the bank offers a "wide range of financial solutions" depending on the SME's stage of growth, including bespoke solutions for SMEs expanding overseas, and trade financing solutions.

OCBC and United Overseas Bank also offer similar SME financing solutions, including micro loans and funding options for buying vehicles and machinery.

Mr Tharman said in written parliamentary responses last year that in evaluating loans, banks would "consider their interests in keeping their customers". MAS does not ask banks to require a "project track record or any specific requirement" from SMEs.

Forum chair Rosanna Choi, in a press statement, said regulation is "not... an enemy of financial innovation". Smart regulation spurs innovation by providing infrastructure and certainty.

ACCA Singapore head Leong Soo Yee called the Productivity and Innovation Credit Scheme an example of "financing innovation" that will continue to assist SMEs in Singapore.

Spring Singapore said it offers several initiatives to help SMEs, including self-help toolkits, vouchers and grants. Its SME centres can advise businesses on government schemes and offer one-to-one help.

Tee Zhuo

Last Updated on : 30 Jan 2015