Unlocking Sustainability: A Guide to Enterprise Financing Scheme - Green Loan

Enterprise Financing Scheme – Green Loan

The Enterprise Financing Scheme – Green Loan (EFS-Green) supports businesses that develop technologies and solutions to reduce waste, resource use, or greenhouse gas emissions. This includes sectors such as clean energy, circular economy, green infrastructure, and clean transportation. From 1 April 2024, it will also support green solution adopters. EFS-Green is part of the Enterprise Sustainability Programme, and applications are open until 31 March 2026. Applications must be submitted to EnterpriseSG and approved by a participating Financial Institution (FI) by this date.

Overview

EFS-Green aligns with the Singapore Green Plan 2030, helping local companies develop green capabilities, build a track record, and seize growth opportunities in the green economy. The scheme aims to generate economic value, positive environmental impact, and good jobs for Singaporeans. By including green solution adopters, EFS-Green helps businesses reduce their carbon footprint and contribute to sustainability goals.

EnterpriseSG provides a 70% risk-share to encourage lending from participating FIs.

Loan Types and Details

1. Developmental Capital Loan

• Purpose: New product development, technology development, consultation, and certification.

• Maximum Amount: S$3 million per borrower.

• Repayment Period: Up to 5 years.

2. Fixed Assets Loan

• Purpose: Purchase of green-related equipment and machinery, construction, or land purchase.

• Maximum Amount: S$30 million per borrower.

• Repayment Period: Up to 15 years.

3. Trade Loan

• Purpose: Trade financing for green and sustainable products.

• Maximum Amount: S$10 million per borrower.

• Repayment Period: Up to 1 year.

4. Project Loan

• Purpose: Finance green projects, both domestic and overseas.

• Maximum Amount: S$50 million per borrower.

• Repayment Period: Up to 20 years.

5. Venture Debt Loan

• Purpose: Support innovative green companies using venture debt and warrants.

• Maximum Amount: S$8 million per borrower.

• Repayment Period: Up to 5 years.

6. Mergers & Acquisitions Loan

• Purpose: Finance M&A activities for green initiatives.

• Maximum Amount: S$50 million per borrower.

• Repayment Period: Up to 5 years.

Risk-Share and Borrower Responsibility

• Risk-Share: 70% by EnterpriseSG.

• Borrower Responsibility: Repay 100% of the loan.

• In Case of Default: FIs follow standard recovery procedures before claiming the unrecovered amount from EnterpriseSG proportional to the risk-share.

• Interest Rate: Subject to the FI's risk assessment.

Eligibility

1. Business Entity Registered and Operating in Singapore

ACRA-registered Sole Proprietorships, Partnerships, Limited Liability Partnerships, and Companies are eligible to apply. Approvals of loans are subject to the participating FI's assessment.

2. Local Equity Requirement

Company must have at least 30% local equity held directly or indirectly by Singaporean(s) and/or Singapore PR(s), determined by the ultimate individual ownership.

3. Sales Turnover

Company's Group Annual Sales Turnover should not exceed S$500 million.

4. Qualifying Green Sectors and Activities

Businesses must meet the criteria for EFS-Green’s Qualifying Green Sectors and Activities and Qualifying Borrower Types.

Qualifying Sectors and Activities

To be eligible, businesses must be involved in one of the following qualifying green sectors and activities:

1. Clean Energy & Decarbonisation

• Energy Efficiency Technologies

• Smart Grids and Related Technologies

• Green Energy Storage Solutions

• Renewable Technologies (Solar, Wind, Geothermal, Hydropower, Hydrogen, Bioenergy)

• Production of Electricity from Renewables

• Low Carbon and Decarbonisation Technologies (CCUS and Related Transportation)

2. Circular Economy & Resource Optimisation

• Water/Wastewater Recycling Technologies

• Technologies to Improve Water Quality and Efficiency

• Resource-Efficient Packaging

• Recycling, Reutilisation, Remanufacturing, and Refurbishing of Materials and Waste

• Waste-to-Energy Solutions/Technologies

3. Green Infrastructure

• Advanced Fabrication and Material Technologies for Green Construction

• Technologies to Reduce Construction Waste

Solutions to Optimise Resource Use in Infrastructure

4. Clean Transportation (Land, Sea, and Air)

• Green Maritime Transport Technologies (LNG, Solar, Hydrogen, Electric/Hybrid Engines)

• Green Aviation Technologies (Green Aviation Fuel, Sustainable Designs, MRO Solutions)

• Electric Vehicles Technologies (Charging Infrastructure, Grid Integration, EV Battery Manufacturing)

Activities must meet ‘Green’ or ‘Amber’ criteria/thresholds as specified under MAS’ Singapore-Asia Taxonomy for Sustainable Finance.

Qualifying Borrower Types

1. Project Developers

Local enterprises that develop, manufacture, build, and operate capital-intensive green projects incorporating proprietary engineering/technologies/solutions with a positive environmental impact.

2. System Integrators

Local enterprises that provide engineering designs, procure equipment, install, and construct facilities for project owners. This includes enterprises that develop the design, procure components, integrate solutions, and assemble the final system/product, providing unique technological value-add with a positive environmental impact.

3. Technology & Solution Enablers

Local enterprises that develop and deploy technology and solutions for other enterprises, resulting in a positive environmental impact.

4. Technology & Solution Adopters

Local enterprises that adopt technologies and solutions that are green or transitional.

How to Apply

To apply, approach any of the participating Financial Institutions (FIs) listed on the EnterpriseSG website. These FIs have developed Green and Sustainable Financing Frameworks approved by a Second Party Opinion (SPO) provider. Loans under the scheme are classified as Green Loans according to these frameworks.

FAQ

1. Who is eligible for the EFS-Green Loan?

Businesses registered and operating in Singapore, with at least 30% local equity and Group Annual Sales Turnover not exceeding S$500 million. They must also be involved in qualifying green sectors and activities.

2. What sectors qualify for the EFS-Green Loan?

Clean Energy & Decarbonisation, Circular Economy & Resource Optimisation, Green Infrastructure, and Clean Transportation.

3. What types of loans are available under EFS-Green?

Developmental Capital Loan, Fixed Assets Loan, Trade Loan, Project Loan, Venture Debt Loan, and Mergers & Acquisitions Loan.

4. What is the maximum loan amount and repayment period for EFS-Green?

The maximum loan amounts range from S$3 million to S$50 million, with repayment periods from 1 to 20 years, depending on the loan type.

5. How does the risk-share work?

EnterpriseSG provides a 70% risk-share, but borrowers are responsible for repaying 100% of the loan. In case of default, FIs follow standard recovery procedures before claiming the unrecovered amount from EnterpriseSG proportional to the risk-share.

6. What is the risk sharing from EnterpriseSG and for which financing products?

Risk-share for EFS-Green will be at 70% for Developmental Capital, Fixed Asset Financing, Trade Loans, Venture Debt Loans, Project Finance, and M&A Loans. The parameters of the scheme coverage are indicated in Annex B.

7. Which are the eligible Participating Financial Institutions (PFIs) on this programme?

The eligible partner FIs for EFS-Green are DBS, UOB, OCBC, HSBC, CIMB, Standard Chartered Bank (SCB), and Maybank. These FIs have developed Green and Sustainable Financing Frameworks approved by an MAS-recognised SPO (Second Party Opinion) provider. Loans under the scheme should be classified as a Green Loan as assessed by the partner FIs in accordance with their Green and Sustainable Financing Frameworks.

8. When is EFS-Green open for application? How long is the scheme available for enterprises?

EFS-Green is open for applications from 1 Oct 2021 until 31 Mar 2026. All applications must be approved by a partner FI by 31 Mar 2026.

9. Can EFS-Green support my company’s projects overseas?

Yes, EFS-Green supports both overseas and domestic projects, so long as they meet the qualifying criteria indicated in Annex A.

10. What is the difference between EFS-Green and other EFS products?

EFS-Green is a targeted scheme to support eligible enterprises (i.e., Project Developers, System Integrators, Technology & Solution Enablers) to capture opportunities in the green economy and enable access to green financing. From April 2024 onwards, EFS-Green will also support enterprises that are Technology & Solution Adopters of qualified green and transitional technologies, to help them embark on their sustainability journey and reduce their carbon footprint. The Enterprise Financing Scheme, on the other hand, provides broad-based support to local enterprises across all sectors and where the utilisation of the loan is only tied to the type of loan facility which the enterprise applied for.

11. Can enterprises apply for the EFS-Green loan and other Enterprise Financing Scheme facilities at the same time?

Yes, enterprises can apply for EFS-Green and other facilities under the Enterprise Financing Scheme if they meet the criteria for each scheme, subject to assessment by the PFIs.

12. Can enterprises apply for the EFS-Green scheme multiple times with different PFIs?

Yes, enterprises can approach the PFIs to apply, with the total aggregated amount borrowed under the scheme together with other Enterprise Financing Scheme products capped at S$50 million per borrower group, subject to the assessment by the PFIs.

13. PFIs are not willing to approve my company’s loan application even though it is eligible for the EFS-Green scheme. What can I do?

All eligible enterprises applying for the EFS-Green scheme are subject to assessment by the PFIs. Enterprises which require further support may approach EnterpriseSG at (65) 6898 1800 or submit an enquiry through this link.

14. As EnterpriseSG provides 70% risk share for the EFS-Green scheme, are borrower/guarantors only responsible for the remaining 30% of the loan?

No. The borrower and guarantor are responsible to repay 100% of the loan amount. When defaults occur, the PFIs are obligated to follow their standard commercial recovery procedure, including the realisation of security, before they can make a claim against EnterpriseSG for the unrecovered amount in proportion to the risk-share percentage.

15. Why do banks require a 100% Personal Guarantee (PG) when the government covers 70% of the loan amount?

A PG is not only a means of security but also signals commitment by the guarantor(s) that they are committed to the loan obligation.

16. For adopters, why do activities have to fall under the “Green” or “Amber” threshold in the Singapore-Asia Taxonomy for Sustainable Finance?

The Singapore-Asia Taxonomy for Sustainable Finance (“SG Taxonomy”) was developed by the Monetary Authority of Singapore, in consultation with industry stakeholders. It provides clear, science-based criteria and thresholds to define green and transition activities. By requiring adopters to have qualified activities meeting the “Green” or “Amber” criteria/threshold defined under the SG Taxonomy, it ensures that companies taking up financing under EFS-Green adopt credible technologies and solutions that meaningfully enable them to reduce their carbon footprint, which in turn accelerates Singapore’s green transition.