Finding Finance for Your Singapore Startup
Singapore’s rise as a well-managed and expanding Financial Hub has made it a land of opportunity for the entrepreneurs. It is no wonder that locals as well as the foreign entrepreneurs dream of having their own Singapore company setup. The authorities, here, have made it easy for them to open a company in Singapore.
Startups in Singapore
However, not all of the startups have the funding to back their business ideas or the plans. The positive side of the incorporation of a company in Singapore is that an innovative idea has a lot more chance of finding financial support and qualified and experienced professionals to nurture it.
Singapore government is determined to support its startups and has invested billions in offering subsidized finance programs, business incubators, tax rebates, and exemptions. It has also offered a few schemes to help its Small and Medium Enterprises (SMEs) to go global. All these factors point to the fact that it the right time to incorporate a company in Singapore.
Where You should Look for Funds in Singapore
A startup, even with the creative and innovative idea, needs funds to expand their operations, and nurture their business activities. Many of the startups fail, because, after a limit, entrepreneurs’ personal funding and that collected from the relatives and friends prove inadequate.
After the initial surge, a Singapore startup must start searching for a potential financial backer. They can present their case to:
- Government
- Banks
- Private Investors
- Venture Capitalist Firms
- Business Incubators
Schemes Financed by Singapore Government
Incorporating a Singapore business to market your innovative ideas is a great step forward. Singapore offers a very strong legal infrastructure to protect IP (Intellectual Property). Its policies make finance easily available to the startup companies that too at very affordable interest rates. The following tables showing Financial Assistance Scheme are also available at SME Tool Kit Singapore website.
| START-UP | GROWTH | INTERNATIONALISATION | |
| FINANCING SCHEMES | Debt-related Schemes | ||
| Micro-Loan Programme (MLP) | Local Enterprise Finance Scheme (LEFS) | Internationalisation Finance Scheme (IF) | |
| Loan Insurance Scheme (LIS) | Loan Insurance Scheme (LIS) | ||
| Equity-related Schemes | |||
| Business Angels Scheme (BAS) | Enterprise Fund | Enterprise Fund | |
| SPRING SEEDS | Growth Financing Programme (GFP) | Growth Financing Programme (GFP) | |
| GRANT SCHEMESPATENT APPLICATION FUND PLUS (PAF PLUS) | Grants | ||
| Innovation Development Scheme (IDS) | |||
| Locally-based Enterprise Advancement Programme (LEAP) | Patent Application Fund Plus (PAF Plus) | Patent Application Fund Plus (PAF Plus) | |
| Local Industry Upgrading Programme (LIUP) | |||
The businesses need to fulfill certain criteria to qualify for these schemes. They need to take expert advice from the Singapore accounting services providers like SBS Consulting.
The Singapore government through its Budget 2015, launched a few new tax incentive schemes, in order to support its SMEs trying to take their business out of Singapore.
| START-UP | GROWTH | INTERNATIONALISATION | |
| TAX INCENTIVES SCHEMESTAX EXEMPTION FOR START-UPSDEVELOPMENT AND EXPANSION INCENTIVE (DEI)DOUBLE DEDUCTION FOR OVERSEAS INVESTMENT DEVELOPMENT EXPENDITURE | |||
| Enterprise Investment Incentive Scheme (EII) | Overseas Investment Incentive (OII) | ||
| Pioneer Incentive (PC-M or PC-S) | Overseas Enterprise Incentive (OEI) | ||
| Industrial Exemption Factory Scheme | Licensed Warehouse Scheme (LWS) | Regional/International Headquarters Award (RHQ/IHQ) | |
| Zero GST Warehouse Scheme | Double Tax Deduction for Market Development (DTD) | ||
| Investment Allowance (IA) | Investment Allowance (IA) | Investment Allowance (IA) | |
| Global Trader Programme (GTP) | Global Trader Programme (GTP) | ||
| Expansion Incentive for Partnerships (EIP) | |||
| SUPPORTING PROGRAMMESTRADE CREDIT INSURANCE (TCI) PROGRAMME | |||
| Warehouse Retail Scheme | |||
| International Partners Programme (iPartners) | |||
| Local Enterprise Technical Assistance Scheme (LETAS) | |||
Singapore Banks and Financial Institutes
Sole Proprietorships and Partnerships
It is not easy for the Sole proprietorships and partnerships to raise finance. They may get term loans from the banks or the financial institutes though they have to provide a guarantor, detailed documentation and demonstrate their ability to repay the loan amount in stipulated time-period.
Private Limited Companies and Limited Liability Partnerships
The Singapore registered private limited companies and the limited liability partnerships find it easy to raise capital to expand their business activities. They can apply and get business loans of up to S$100,000 if they fulfill the qualifying criteria.
- They need to be locally registered business
- A Singaporean resident must own 30% or more of its shares
- Annual turnover less than S$1 million
- Number of employees less than 10
The lending organization may ask the startup to fulfill additional requirements.
Debt Financing Schemes Micro Loan Program for Startups
Singapore government, in collaboration with the banks, provides S$50,000 as a loan under this scheme to the startups. The business owners can repay it in about 4 years and they have the option of choosing fixed (6.25% per annum) or variable interest rate.
Private investors, Venture Capitalist firms, or the Business Incubators
To raise the funding for a Singapore company, their owners can turn to the Private investors, Venture Capitalist firms, or the Business Incubators. These seasoned entities support practical ideas or the business plans. They also back the owners with valuable market experience. They even open business networks at their disposal to the owners to further a startup’s goals.
However, in return these financiers may ask for a position in the management, substantial shareholding, etc., in the new Singapore company setup to safeguard their investment. It is quid pro quo arrangement.
