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The outbreak of Coronavirus disease, also referred as COVID-19, is a global pandemic that has imposed adverse economic repercussions worldwide. Among other countries, Singapore’s economic ecosystem is also hit by the widespread of this contagious disease.
Ever since the deadly virus unleashed upon the country, the government has issued proactive measures and packages to provide relief and support to small-and-medium-sized-enterprises (SMEs) through the worst economic crisis, and cushion the financial strain.
MEASURES TAKEN BY THE GOVERNMENT TO AID SME IN THE WAKE OF COVID-19
The authorities have issued three COVID-19 stimulus packages, over the course of three months, to help businesses stabilize their cash flow and retain employment.
Unity Budget - First COVID-19 Relief Stimulus Package:
Given the situation at hand, this package was announced on February 18th, 2020, to provide temporary support to SMEs hit by the novel Coronavirus via:
✔ Allowing businesses a maximum of S$600,000, loan principle with a significant increase in the risk-share percentage to 80 percent.
✔ The package entails corporate tax relaxation of 25% percent in 2020, i.e. maximum S$15,000 per company.
✔ To further facilitate the companies under this package, the government will not raise goods and services tax (GST) in the coming year.
✔ The package offers: job support scheme and enhancement of wage credit scheme. The former will reduce 8% of salaries, and the latter will surge the co-funding of salary from the existing 10 percent to 15 percent in 2020.
✔ As part of restoration and recovery after the pandemic, the government has allotted a whopping S$8.3 billion grant for the coming three years. The grant will benefit numerous SMEs to grow and flourish.
Resilience Budget - Second COVID-19 Relief Stimulus Package:
To counter the grave impact of COVID-19, the government of Singapore issued the second relief stimulus package, worth S$48 billion on March 26th, 2020. This relief package provides the following incentives, like tax rebates and deferments, to support businesses and enterprises in the endeavor of stabilizing the economy:
✔ This package grants businesses income tax deferment for next three months due to prevailing cash flow predicament.
✔ The property tax rebate is increased to 30% - 100% percent, and also covers a broader domain of properties that can leverage it to their benefit.
✔ The Resilience Budget has issued a Trade Loan Financing Scheme (ES-Trade Loan) to fund SMEs transactions, both domestic and international. The benefits of ES-Trade Loan are: increased maximum loan principle for SMEs to S$10 million, with risk-share of 70% – 80%.
✔ Subsidy under Loan Insurance Scheme (LIS) for businesses is enhanced to 80%.
✔ Under the Resilience Budget, a three month rental waiver will be granted to hawker centers under National Environmental Agency (NEA).
Solidarity Budget - Third COVID-19 Relief Stimulus Package:
This latest relief stimulus package, announced on April 6th, 2020, worth S$5.1 billion is named as Solidarity Budget. It offers a holistic approach to negate the impact of the pandemic, via increasing fiscal incentives for citizens, reduction on foreign worker levies and salary subsidies. The incentives of this budget are as follows:
✔ To further aid businesses with credit and cash flow, all Foreign Worker Levy (FWY) due in the month of April will be waived.
✔ In these dire times, to ease the pressure on enterprises, S$750 will be rabted to FWL by the government.
✔ One month’s rental will be waived off to tenants of government agencies.
✔ Furthermore, to boost SMEs, the authorities have raised the risk-share from 80% to 90% on EFS- SME Working Capital Loan, Temporary Bridging Loan and EFS-Trade Loan.
From the launch of the first package in February till the third package, the value of Singapore’s total relief stimulus now stands at about S$60 billion.
The updated packages are devised to mitigate unprecedented hurdles faced by SMEs, addressing their most important concern, i.e. liquidity and continuity of cash flow. To harness the benefits of the aforementioned incentives, you must apply under the guidance of a professional advisor.
To find out how the above government initiatives can help fellow SMEs and business owners, contact Mortgage Consultancy for an unbiased advice now!
We are here to help you stay updated and informed during this crisis.
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