This is a huge opportunity for SMEs to upgrade technology.
#2: Singapore's new financing initiatives will create credit flexibility for companies launching ideas, products, divisions and other expansionary measures.
Singapore's new budget provides SMEs with the chance to punch above their weight with respect to spending power. The budget calls for both a co-investment programme and a micro-loan initiative. The co-investment dollars can be spent in conjunction with private companies to create a better, stronger coordinated investment opportunity for public and private companies, and provide more patient growth in the form of both equity and mezzanine capital. As for the micro-loan programme, it increases the amount of risk the government can take on in a business from 50% to 70%.
How to leverage new budget financing: Companies seeking capital can now consider the government in a more positive light as a potential resource. As for whether the micro-loan or co-investment approach is stronger, the options will likely vary from company to company. Some companies may be able to find effective private sector strategic partners, while others may prefer to take something entirely government-backed, especially if they are in construction, an industry the government has already addressed with other similar initiatives. Using financing and taking tax credits together may be an excellent way for certain companies to reposition themselves much stronger financially.
#3: Current PIC initiatives have been expanded and extended.
PIC is the Product and Innovation Credit, an opportunity for companies looking to expand their capabilities to claim larger tax credits than ever before. The PIC has been in effect in past budgets to great success, and the government is pushing it yet again for its 2014 proposal. PIC sets aside $3.6 billion over the past three years and allows for companies to claim tax deductions of up to $1.2 million. Specifically, SMEs will see an increase in expenditure cap, from $400,000 to $600,000. The government will also allow a tax break of up to 50% for qualified R&D initiatives.
How SMEs can capitalize on PIC: Not everyone has the capital to make a move in the innovation space, but this is exactly the right size break for certain SMEs to get over the hump into the next class of growth. SMEs must constantly innovate to survive the always growing, competitive global market, as well as the competition faced at home in Singapore. Research and Development is already key to free market success. If you can save money implementing it, it's an opportunity worth taking advantage of.
The new budget throws SMEs a major lifeline on affording it.
#4: The new budget calls for internationalization.
While overseas initiatives are not brand new to Singapore, the change here is substantial. The amount of money available to companies seeking to internationalize will double from $15 million over two years to $30 million over two years. New initiatives will also take on extra support, as pilot and test-bedding projects in international territory will see a raise in support level from 50% to 70%. The budget will also support staffing initiatives in foreign markets, suggesting that global business is a major strength for the city state according to the belief of those with the signature authority on government expenditures.