More SMEs face financing problems, seek Govt help

SINGAPORE: A new survey reveals that more Singapore companies are expected to grapple with financing problems throughout the year. Small and medium-sized enterprises (SMEs) have said that in a high interest rate environment, borrowing from banks will increase operating costs, but without additional funds, these companies face obstacles if they want to expand their business or go international.

The survey, by the Singapore Business Federation (SBF), shows that 11 per cent of the SMEs polled reported inadequate cash reserves, marking a significant five per cent increase from the previous year. Companies in the manufacturing sector, in particular, voiced difficulties in managing loan interest payments and related borrowing costs.

An SBF representative emphasized the urgency for SMEs to undergo digital transformation, reducing reliance on manual labor and embracing automation. Failure to adapt to these changes, the representative warned, could lead to increased operational costs, becoming a primary factor in business failures for many companies.

Expressing the need for government intervention, SBF called on authorities to provide assistance to SMEs, particularly in the form of financial support for digital transformation. The federation urged the government to maintain the loan limit for SMEs at $500,000 for at least the next year, while also considering the provision of funds to enterprises seeking to undergo transformation.

As anticipation builds for the 2024 budget announcement later this month, SBF added that it also hopes that the government will help small and medium-sized enterprises solve their cash flow problems.