Singapore Budget 2022: Key takeaways for SMEs
With the recently announced Budget 2022, what are the measures that will most affect SMEs and what should business owners pay extra attention to?
The Singapore Budget 2022 was delivered by Finance Minister Lawrence Wong on 18 February 2022. Dubbed the “Charting Our New Way Forward Together” Budget, it covered four broad topics:
Invest in new capabilities
Renew and strengthen our social contract
Advance our green transition
Build a fairer and more resilient tax system
Here are five key announcements from Budget 2022 that small and medium business owners should take note of.
1. SGD 500 million Jobs and Business Support Package
As part of the package, there will be a new Small Business Recovery Grant, which pays out:
SGD 1,000 per local employee (capped at SGD 10,000 per firm) for companies in certain sectors only
SGD 1,000 one-off grant for local sole proprietors, partnerships, Singapore Food Agency-licensed hawkers, and market and coffeeshop stallholders who do not have local employees
The Jobs Growth Incentive (JGI) has also been extended by six months to September 2022. The incentive supports SMEs in the hiring of mature and vulnerable workers (including persons with disabilities and ex-offenders), but be aware that the rates have been stepped down and businesses will need to meet certain criteria to be eligible.
2. Waiver of Skills Development Levy for SkillsFuture Enterprise Credit
The SkillsFuture Enterprise Credit supports companies that want to send their workers for upskilling or industry-relevant training. However, the criteria for eligibility has tended to favour larger enterprises that have contributed at least SGD 750 in Skills Development Levy over a qualifying period.
The waiver of the Skills Development Levy now means that more smaller enterprises will be eligible to claim up to SGD 10,000 of SkillsFuture Enterprise Credit to fund up to 90 per cent of transformation and training initiatives. An estimated 80,000 businesses are now deemed eligible to claim, double the previous number of 40,000. The deadline to claim the credit has also been extended by a year to June 2024.
3. Extended Temporary Bridging Loan Programme and enhanced Trade Loan Scheme
To help businesses gain better access to working capital, the government has extended both the Temporary Bridging Loan Programme (TBLP) and the enhanced Trade Loan Scheme by six months to September 2022. These measures aim to help SMEs with cash flow concerns as they cope with rising inflation. Keep in mind that parameters have been changed, however, most notably with regard to maximum loan quantum allowed.
4. SGD 600 million to enhance Productivity Solutions Grant
The government has set aside SGD 600 million to scale up the Productivity Solutions Grant (PSG)—it expects to support over 100,000 PSG projects within the next four years. The grant provides SMEs with up to 80 per cent funding for digital and automation solutions that raise productivity, and will include subsidised accounting and point-of-sale solutions to support the new goods and services tax (GST) adjustments.
5. SGD 200 million support for building digital capabilities
The amount has been set aside to enhance schemes that build digital capabilities in businesses and workers. These include the Infocomm Media Development Authority (IMDA)’s Grow Digital and Advanced Digital Solutions (ADS) initiatives.
Grow Digital is aimed at SMEs that are looking to expand into overseas markets, helping them gain access to B2B and B2C e-commerce platforms and ecosystems. ADS is slightly more niche, supporting local businesses with more advanced, integrated digital solutions such as artificial intelligence, robotics and the Internet of Things. Both Grow Digital and ADS offer up to 70 per cent funding support.
SME Pulse Check Survey
DBS Bank has just published the latest edition of our SME Pulse Check Survey, which we ran after the Singapore Budget 2022 was announced to better understand the needs and concerns of our SMEs.
We found that over 85% of SMEs are placing a high priority on maintaining consistent cashflow and managing costs in 2022. However, SMEs appear ready to tackle some of the biggest cost drivers looming in the horizon, though medium-sized enterprises were generally more confident of coping as compared to micro and small businesses.
Read more here
For full details of the Singapore Budget 2022, visit Mof.gov.sg/singaporebudget, and subscribe to DBS BusinessClass for more insightful content on the latest market trends and insights for SMEs.