Over in three of Singapore’s small and medium enterprises (SMEs) reported improved access to financing in 2018, up from only 19% in 2017, reports Linkflow Capital.
Research data and statistics come from the business loan advisory firm’s SME loan comparison portal launched in 2017 and the latest survey is based on data generated from over 2,771 users over the 12 months to December 2018.
“In 2018, our dataset suggests a significant improvement for SMEs attempting to secure business financing, with up to 34% of our portal users eligible indicatively for financing,” said Ben Teo, a business development manager for Linkflow Capital This is almost double that of our 2017 survey which indicated only a 19% eligibility rate,".
“In our opinion, some of the reasons for this improvement in financing eligibility could be due to factors such as the Singapore government's continued support to SMEs in financing schemes such as the SME Working Capital Loan and healthy domestic economic growth in 2018 that exceeded expectations.
“More alternative lending options for SMEs such as peer-to-peer (P2P) crowdfunding platforms introduced in recent years could also lead to an increase in business lending.”
Growth forecast trimmed
Linkflow said that a further factor behind the improved access to financing revealed in the latest survey is better profitability across the city state’s businesses. Data from 2017’s survey indicated that 55% of users were loss-making, while only 19% of users reported financial losses in the 2018 research.
In both years’ research, a common reason for financing ineligibility was low revenue and poor cash flow stayed consistent, with 51% of users reporting both annual revenue of below S$300,000 (US$221,300) and low operating cash flow in the 2018 survey; little changed from 2017’s figure of 52%.
Last year saw more new start-ups attempt to access financing, with 26% of users comprised of businesses incorporated for less than a year, against 21% in 2017.
Recent economic data suggests that the overall macro view of Singapore’s trade-reliant economy has been clouded by the accelerating US-China trade dispute. At the start of the year, economic growth for 2019 was forecast at 2.6%, which was trimmed to 2.5% after a weak Q1 and last month downgraded again in a Monetary Authority of Singapore (MAS) survey to 2.1%.
However, Singapore’s trade and industry minister Chan Chun Sing stressed this week that the city state is well positioned to weather the effects of a protracted trade war between the world’s two biggest economies and was ready to step up its support for companies as and when necessary.
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