Singapore Government Grants | Financing Schemes | Assistance
There are various option of seeking Government assistance and Singapore Government Grants (in most cases available for all Singaporean entrepreneurs and majority-owned Singapore entities, but in some cases also open to teams with foreign entrepreneurs or jointly-owned by Singaporean and foreign entrepreneurs and newly setup company).
These options are namely as follows:
Financing options offered via SPRING Singapore
Under the Micro-Loan Program, participating banks and financial institutions will lend eligible Singapore companies loans of up-to S$100,000 for daily operational costs or for automating and upgrading, and the purchase of factory equipment— your start-up/SME will have to pay a minimum 5.75% interest rate for loan tenures of less than 4 years.
Under the Loan Insurance Scheme (LIS), the government will co-share the insurance premium with the start-up enterprise to insure loans against default risks for both domestic trade and overseas trade facilities. The risk profile of your company(and its principals) will determine the premium rate, interest rate, and loan tenure set by the insurer, and the Government will provide 50% support for the premium.
Under the Local Enterprise Finance Scheme (LEFS), participating banks and financial institutions provide loans to Singapore companies of up to S$15 million at interest rates of approximately 4.75% to 5.25% for terms ranging from below to above 4 years. These loans are specifically for automating and upgrading factory and equipment/construction equipment/heavy vehicles, and/or purchasing factory and business premises.
Internationalisation Finance Scheme (IFS): Overseas ventures are generally associated with higher risks. This present challenges for companies looking to secure financing from banks for their overseas investments and/or projects. IFS is designed to facilitate companies’ access to financing for their overseas ventures through the co-sharing of default risks between IE Singapore and Participating Financial Institutions (PFIs). With IFS, companies can access up to S$30 million in credit facilities to support their overseas expansion. Click here for more information.
Singapore Tax Incentive Schemes (General)
Tax Exemptions: Full tax exemption on a certain amount of a qualifying Singapore startup’s taxable income for the each of their first 3years can be enjoyed if your newly incorporated Singapore company satisfies the criteria of being incorporated in Singapore, be a tax resident of Singapore and has no more than 20 shareholders with at least one individual shareholder holding at least 10% of shares). For such qualifying companies, the first S$100,000 of taxable income is exempted and the next S$200,000 of taxable income is taxed at 8.5% (partial exemption). Only if you hit a taxable income of above S$300,000 will it be charged at the normal corporate tax rate of 17%. Thereafter, from the fourth taxable year onwards, 8.5% tax rate on taxable income of up to S$300,000 per year applies. The taxable income above S$300,000 will be charged at the normal headline corporate tax rate of 17%.
Investment Allowances: Capital allowance may be claimed on plant and equipment expenses accrued in connection with your business. Additionally, beginning the Year of Assessment 2013, you may be allowed to seek an allowance on fixed capital expenditure incurred for productive equipment placed overseas on approved projects, under the new Integrated Investment Allowance Scheme introduced in the Singapore Budget 2012.
Productivity and Innovation Credit (PIC) Scheme: The PIC scheme provides tax benefits to encourage companies to engage in innovative and productive activities. Your business may enjoy up-to 400% deduction or allowances on up to $400,000 of expenditure incurred in relation to the qualifying activities. These include the purchase of technology and equipment, Research & Development; Intellectual Property registration and acquisition; Design activities, Automation and training (or re-training) of employees. For the YA 2013 to YA 2015, your business will be allowed to combine the $400,000 expenditure cap per year for to a ceiling of $1,200,000 over those 3 years. Also, businesses with a low taxable income may opt to convert up to S$300,000 of the tax deductions and allowances credited to them into a cash grant, up to a maximum of S$21,000/year. Your business may also exercise an option to convert up to S$100,000 of your expenses into a non-taxable cash payout at a rate of 30% to 60% for your qualifying expenditure from YA 2013 to YA 2015. A bonus is that these PIC benefits are also applicable to R&D done overseas. For more information, please refer to Productivity and Innovation Credit. The PIC Bonus gives businesses a dollar-for-dollar matching cash bonus for YAs 2013 to 2015, subject to an overall cap of $15,000 for all 3 YAs combined. The PIC Scheme, which lapses after YA2015, will be extended for three years (i.e. YA2016 to YA2018) at the current support level. Besides, to help firms that are making substantial investments to revamp their businesses, we will raise the expenditure cap for each of the six qualifying activities from the current $400,000 to $600,000 with effect from YA2015. The cash payout rate will be lowered from 60% to 40% for qualifying expenditure incurred from 1 August 2016. All other conditions of the scheme remain unchanged. The PIC scheme, which has been extended for YA2016 to YA2018, will expire thereafter. It will not be available from YA2019.
Development and Expansion Incentive (DEI): Your tax obligation on income derived from qualifying activities under the DEI may be reduced, if you qualify and engage in business activities that move towards high value-addition business activities, expand your operations in the country, and procure advanced machinery and equipment in the specific areas gazetted.
Pioneer Incentive Scheme: Manufacturing or services sector companies that engage in activities to raise overall industry standards may be eligible for corporate tax exemption on qualifying profits for up to 15 years.
Double Tax Deduction for Internationalisation: Enjoy tax savings with DTDi which provides 200% tax deduction on eligible expenses for supported market expansion and investment development activities. You can automatically claim 200% tax deduction on the first S$100,000 of eligible expenses for these four activities below per year of assessment. No prior approval from IE Singapore is required. Expenditure exceeding S$100,000 will still require IE Singapore’s approval. For more information, click here.
Other incentives in Singapore
Market Readiness Assistance (MRA) Grant – Singapore recognise that entering a new overseas market can be a daunting challenge. The Market Readiness Assistance (MRA) Grant is designed to help your overseas expansion start off on the right foot by supporting pre-determined activities for:
– Overseas Market Set-up
– Overseas Business Partners
– Overseas Market Promotion
The scheme support 70 % of the eligible cost for activities listed above, capped at S$20,000 per company per fiscal year. Maximum of two applications per fiscal year, starting on 1 April and ending on 31 March the following year. Click MRA Grant for more information.
WorkPro – WorkPro is a new scheme jointly developed by the Ministry of Manpower (MOM) and the Singapore Workforce Development Agency (WDA) to augment local manpower, foster progressive workplaces and strengthen the Singaporean core in our workforce. The programme is designed in consultation with the tripartite partners – Singapore National Employers Federation (SNEF) and the National Trades Union Congress (NTUC), who will manage and administer the programme for 3 years from 1 April 2013 to 31 Mar 2016. WorkPro (Employers) for more information.
Innovation & Capability Voucher (ICV) – The Innovation & Capability Voucher (ICV) replaces the old Innovation Voucher Scheme (IVS), which supported only technology innovation services. The $5,000 voucher now allows SMEs to pay for services in three more areas — Productivity, Human Resources and Financial Management. The aim is to encourage SMEs to start upgrading in these areas to enhance their capabilities. Innovation & Capability Voucher (ICV) for more information.
SME Productivity with Infocomm Adoption & Transformation (iSPRINT) – This scheme addresses SMEs’ various infocomm adoption needs – from simple solutions for the improvement of your business operations to innovative use of technology for the transformation of your business or sector. iSPRINT is an integrated grant scheme led by IDA in collaboration with SPRING Singapore and the Inland Revenue Authority of Singapore (IRAS). With IDA as the one-stop gateway for grant applications, SMEs can get funding assistance for a wide scope of qualifying costs, ranging from basic, ready-to-use IT packages to large-scale, tailor-made enterprise systems. Small & Medium Enterprises for more information.
ACE Start-ups Scheme: The Action Community for Entrepreneurship (ACE) matches S$7 for every S$3 that an entrepreneur raises, up to S$50,000. For selected ventures, however, ACE is able to raise the limit of their contribution to S$100,000. The benefit to you is that, unlike private equity investors and venture capitalists, ACE does not take equity in exchange for this grant. ACE Start-ups Grant for more information.
Technology Enterprise Commercialisation Scheme (TECS): The Monthly TECS Briefing Sessions and Technology Enterprise Commercialisation Scheme (TECS) addresses the early-stage funding needs of start-ups engaged in the commercialisation of proprietary technology ideas.
The iSTART:ACE (Accelerate & Catalyse Entrepreneurship) grant scheme: The Infocomm Development Authority (IDA) offers funding to qualifying start-ups through a grant that covers up-to 50% of salaries of five technical staff for one year up to a maximum of S$250,000. iSTART: Accelerating & Catalysing Entrepreneurship (ACE) for more information.
ComCare Enterprise Fund (CEF): The Ministry of Community Development, Youth & Sports administers the ComCare Enterprise Fund that provides seed funding for social enterprise start-ups (strictly from the social service areas) that train and employ disadvantaged Singaporeans of up to 80% of the capital expenditure and first two years’ operating costs, subject to a maximum of S$300,000. ComCare Enterprise Fund for more information.
The New Initiative Grant (NIG): The National Volunteer and Philantrophy Centre (NVPC) provides seed money for Singapore-based start-ups with new initiatives that meet community needs in Singapore and are strong in volunteerism and/or philanthropy. If your start-up meets these criteria, you can be funded for up to 80% of costs (e.g. manpower, rent, equipment, volunteerism and philanthropy-related costs) for one year (subject to a maximum of S$200,000) in your pursuit of such initiatives. New Initiative Grant (NIG) for more information.