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

Enterprise Financing Scheme – Project Loan: Supporting Your Overseas and Domestic Projects

The Enterprise Financing Scheme – Project Loan (EFS-PL) is designed to help enterprises finance secured overseas and domestic projects. This scheme is particularly beneficial for businesses involved in significant construction or fixed asset investments. In this blog post, we will delve into the details of the EFS-PL, covering its scope, eligibility criteria, loan details, and application process.

Overview of the EFS-PL

The EFS-PL primarily aims to finance the fulfillment of secured overseas projects. However, as announced in Budget 2024, the support for domestic projects for construction enterprises has been extended until 31 March 2025. The types of supportable loans under this scheme include working capital loans, loans for factory/building/land purchases, renovation or construction, equipment/machinery/vessel purchases, and guarantees.

Loan Details

Maximum Loan Quantum:

• For overseas projects: S$50 million per borrower

• For domestic projects until 31 March 2024: S$30 million per borrower

• For domestic projects from 1 April 2024 to 31 March 2025: S$15 million per borrower

Borrowers are subject to an overall borrower group limit of S$50 million for overseas projects and S$30 million for domestic projects under the EFS-PL. Additionally, there is an overall loan exposure limit of S$50 million per borrower group across all facilities.

Maximum Repayment Period: Up to 15 years

Conditions: The loans must be tied to an underlying contract, secured sales order, or projects related to the fixed asset, working capital loan, or guarantee.

Enterprise Singapore Risk-share

• Standard risk share: 50%

• For young enterprises or those operating in challenged markets: 70%

• Borrowers must repay 100% of the loan amount. Participating Financial Institutions (PFIs) must follow standard commercial recovery procedures, including the realization of security, before claiming the unrecovered amount from Enterprise Singapore.

Interest Rate

The interest rate is subject to the participating FIs’ assessment of the risks involved.

Eligibility Criteria

1. Business Registration: The business entity must be registered and operating in Singapore. This includes ACRA-registered Sole Proprietorships, Partnerships, Limited Liability Partnerships, and Companies.

2. Local Equity: The company must have at least 30% local equity held directly or indirectly by Singaporeans or Singapore PRs, determined by the ultimate individual ownership.

3. Annual Sales Turnover: The company must have a Group Annual Sales Turnover not exceeding S$500 million.

4. SSIC Codes: Enterprises registered with SSIC codes beginning with 41, 42, or 43 are eligible for the enhanced EFS-PL to support domestic projects.

5. Project-based Use: Fixed assets acquired must be to fulfill a contractual obligation under a project. The loan must be tied to secured sales orders and/or projects and cannot be used solely for general working capital or operating expenses.

How to Apply

Interested enterprises can approach any of the participating Financial Institutions (PFIs) to apply for the loan, subject to the banks’ credit approval. Applications can also be made via the Enterprise Singapore Incentive Management System (ESIMS).

Frequently Asked Questions

1. What is the objective of the Enhanced EFS-PL? The Enhanced EFS-PL supports enterprises in their internationalization efforts by assisting in financing secured overseas projects. For construction companies, it also helps in financing secured domestic projects.

2. Who is eligible for the Enhanced EFS-PL? The scheme is available to enterprises in the construction industry that meet the specified criteria, including business registration in Singapore, local equity, and sales turnover limits.

3. When is the Enhanced EFS-PL open for application? The Enhanced EFS-PL has been available since 1 January 2021. Eligible enterprises can approach PFIs to apply.

4. Can enterprises apply for the Enhanced EFS-PL multiple times with different PFIs? Yes, but the total aggregate amount borrowed under the scheme is capped at the maximum quantum per borrower/borrower group.

5. Can enterprises apply for other loans alongside the Enhanced EFS-PL? Yes, if they meet the criteria for each scheme, subject to assessment by PFIs.

6. What happens if PFIs do not approve a loan application? Enterprises can seek further support from Enterprise Singapore.

7. Are borrowers responsible for the full loan amount despite the risk share? Yes, borrowers and guarantors are responsible for repaying 100% of the loan amount.

Conclusion

The Enterprise Financing Scheme – Project Loan offers significant support for enterprises aiming to undertake large-scale projects, both overseas and domestically. With substantial loan amounts, extended repayment periods, and risk-sharing by Enterprise Singapore, businesses can better manage the financial demands of their projects. By understanding the eligibility criteria and application process, enterprises can leverage this scheme to drive growth and success in their respective fields.