Enterprise Financing Scheme (EFS) in Singapore 2025 Update

UBE SG
May 5
30 min read

Updated: May 6

The Enterprise Financing Scheme (EFS) is a government-backed financing program in Singapore that streamlines multiple SME loan schemes into one umbrella. Launched in October 2019 by Enterprise Singapore (ESG) (a government agency under the MTI), it consolidated eight previous schemes (from former SPRING and IE Singapore) into a single platform. The main objective of EFS is to provide comprehensive financing support for local enterprises across different stages of growth, for both domestic and overseas activities. By adopting common eligibility criteria and a unified application process, EFS makes it easier for businesses and participating financial institutions (PFIs) to navigate various financing options. In essence, the scheme aims to help Singapore companies – especially start-ups and SMEs – access capital more readily by having the government share loan default risks with partner banks, thereby encouraging lending to these companies.

Agencies Involved: EFS is administered by Enterprise Singapore in partnership with private-sector Participating Financial Institutions (PFIs) (primarily banks and financial institutions). Enterprise Singapore sets the scheme parameters and provides the government risk-sharing portion of the loans, while the PFIs evaluate applications and disburse the loans. The Monetary Authority of Singapore (MAS) also supports related initiatives (for example, MAS launched a Green and Sustainability-Linked Loan Grant Scheme complementary to EFS-Green), but the EFS itself is chiefly managed by Enterprise Singapore.

Types of Loans under EFS

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Under the EFS umbrella, there are several loan categories tailored to different business needs. Initially, six financing areas were covered – Working Capital, Fixed Assets, Trade, Venture Debt, Mergers & Acquisitions (M&A), and Project Financing – and a seventh “Green” financing category was added in 2021 to support sustainability projects. Below is a list of each type of loan under EFS and what it entails:

SME Working Capital Loan (EFS-WCL): An unsecured working capital loan for day-to-day operational cash flow needs of SMEs. This government-assisted loan helps small businesses finance short-term expenses such as overhead, inventory, or payroll. During COVID-19, the WCL cap was temporarily raised (from the usual ~S$300k) to S$1 million with 90% government risk-share to address urgent cashflow needs; post-pandemic, it reverted to lower limits (typically up to a few hundred thousand dollars) with government risk-sharing of 50% (or 70% for young companies). The EFS-WCL is aimed at locally owned SMEs that may lack collateral and would benefit from easier access to working capital financing.
SME Fixed Asset Loan (EFS-FAL): A loan for purchasing equipment, machinery, or fixed assets, and/or financing the acquisition of facilities (e.g. factories or premises) to expand business operations. It helps companies undertake capital expenditures to improve productivity or increase capacity. The EFS-Fixed Asset Loan can finance up to 90% of the asset’s value (e.g. purchase of plant, equipment, factory units) with repayment tenure up to 8–15 years. This loan is best suited for SMEs investing in new machinery, technology hardware, or property for business growth.
Trade Loan (EFS-TL): A financing scheme to support short-term trade financing requirements of companies, such as the import/export of goods and inventory financing. EFS-Trade loans help businesses with purchase of inventory, stocking, supplier payments, export bills, and other trade needs. Facilities under this category include invoice financing, factoring of receivables, import letters of credit, export credit, and bank guarantees for trade. The standard maximum loan quantum is about S$5 million per borrower for trade financing (temporarily increased to S$10 million during 2020–2021). Trade loans are typically short-tenure (up to 1 year) and are best suited for companies engaged in trading, wholesale distribution, or those with significant import/export activities that need working capital to fulfill orders.
Venture Debt Loan (EFS-VD): A special category to encourage high-growth start-ups and innovative companies to obtain growth capital through venture debt. Venture debt is a form of debt financing for startups that have high potential but may not have substantial assets to pledge – it often comes with warrants or equity options for the lender to compensate for higher risk. The EFS Venture Debt program (first piloted in 2015 and later folded into EFS) provides loans to eligible young companies, with the government sharing 50% of risk (or 70% for young startups). These loans (typically up to around S$5–8 million in quantum) can be used for purposes such as business expansion, product development, market entry, or even acquisitions by startups. EFS-VD is best suited for early-stage technology companies or other innovative SMEs that have strong growth prospects but little in the way of tangible collateral – it gives them access to financing beyond equity funding, while lenders are partially cushioned by government risk-sharing.
Project Loan (EFS-PL): Financing for companies to undertake specific projects, usually overseas projects in infrastructure, construction, or development. The EFS Project Loan covers funding needs such as purchasing equipment or machinery for the project, working capital for project execution, or the issuance of contract performance guarantees. Originally, this scheme was focused on overseas projects (to support internationalization), but during COVID-19 the government temporarily expanded it to also cover domestic projects (e.g. local construction contracts) to support firms when overseas ventures were limited. The loan quantum is large – up to S$50 million per borrower for overseas projects (and up to S$30 million for domestic projects during the temporary extension) – with long repayment periods (up to 15 years for fixed asset financing under a project, or shorter for working capital). This type of loan is best suited for established SMEs or mid-sized firms securing sizable projects (for instance, a construction firm building infrastructure overseas) who need significant financing to deliver on project contracts.
Mergers & Acquisitions Loan (EFS-M&A): A loan to support enterprises in acquiring target companies for growth and expansion. The EFS M&A loan is geared towards helping businesses scale up via acquisitions, including venturing into new markets or sectors through buying other companies. Initially, the scheme focused on M&A for international expansion (overseas targets), but from **1 April 2022 to 31 March 2026, it has been enhanced to include domestic M&A deals as well. The loan can finance up to S$50 million per borrower or borrower group for qualifying M&A transactions. Government risk-sharing is 50% (standard) or 70% for “young” enterprises (within 5 years old) and for acquisitions in challenging markets. This loan is best suited for companies pursuing acquisitions – either local firms consolidating or expanding into new business lines, or SMEs buying overseas companies – typically to accelerate growth, enter new markets, or acquire new capabilities.
Green Loan (EFS-Green): Introduced in October 2021 as part of Singapore’s Enterprise Sustainability Programme, EFS-Green supports companies developing green technologies, sustainable projects or products. It provides financing for businesses that contribute to environmental sustainability – for example, projects in clean energy, circular economy, green infrastructure, clean transportation, etc. Rather than a single loan type, EFS-Green serves as a green financing umbrella under which enterprises can apply for various loan types (working capital, fixed asset, trade, project, venture debt, or even M&A) specifically for green initiatives. For instance, a company could get a Green trade loan to finance sustainable supply chain purchases, or a Green fixed asset loan to buy eco-friendly equipment. The loan quantum supported under EFS-Green depends on the loan type – e.g. up to S$3 million for development expenses, up to S$30 million for green fixed assets, up to S$50 million for green projects, etc., subject to overall group limits. Notably, EFS-Green was launched with a limited timeframe (applications open until 31 March 2024) as a pilot initiative. It is best suited for companies undertaking environmental sustainability projects or building green capabilities, allowing them to access financing to capture opportunities in the growing green economy. (One unique point: when first launched, HSBC was the sole international bank offering EFS-Green loans, reflecting a targeted push to involve specific lenders in green finance.).

Eligibility Criteria for EFS Support

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To qualify for loans under the Enterprise Financing Scheme, businesses must meet certain eligibility criteria set by Enterprise Singapore. The requirements are designed to ensure that the scheme targets local enterprises that genuinely need financing assistance. Key eligibility criteria include:

Local Registration and Presence: The company must be registered and operating in Singapore (e.g. incorporated here and with business activities in Singapore). It should have a physical presence in Singapore.
Minimum Local Shareholding: At least 30% of the company’s ownership must be held by Singaporeans or Permanent Residents (either directly or indirectly). In other words, the enterprise should be locally owned to a significant extent.
Business Size (SME Definition): For most EFS loan categories, the applicant should be an SME. Generally, this means the company’s group annual sales turnover is ≤ S$100 million, or it employs no more than 200 workers. (This is the standard definition of SME in Singapore; meeting either the revenue or employment cap qualifies.) Enterprise Singapore also caps the borrower group’s revenue at S$500 million for eligibility – this ensures the scheme primarily supports small and mid-sized enterprises and not very large corporations. Note: Certain loan types like Trade or Project loans can be accessed by larger mid-sized companies (up to the S$500M group turnover limit) even if they exceed the SME threshold, but the SME Working Capital and Fixed Asset loans are specifically tailored for companies under the $100M/200 employees SME benchmark).
Industry Sector: EFS is open to businesses across all industries – there is no specific sector focus or restriction. Companies from manufacturing to services to tech can apply, as long as they meet the other criteria. (That said, certain excluded activities like gambling or vice trades would not be supported, in line with general government financing policies.)
Other Conditions: The business should not be facing legal insolvency proceedings, and owners/guarantors should have acceptable credit history (banks will do their credit assessment). For some schemes, additional criteria may apply – for example, the M&A loan requires that the target being acquired also meets EFS criteria (i.e., the company to be bought should itself be a Singapore-based SME in terms of size and ownership). “Young” companies (formed within the last 5 years) can still qualify; in fact, EFS provides higher support to such firms to encourage start-ups. Ultimately, final approval is subject to the participating bank’s credit evaluation, since even with government backing the bank must deem the borrower creditworthy.

In summary, local SMEs with at least 30% Singaporean/PR ownership, and within the SME size thresholds, are the core eligible group for EFS loans. The scheme is meant for companies that “require the most financial assistance” and might otherwise struggle to obtain sufficient financing on commercial terms. Foreign-owned firms or very large companies are generally not covered. As long as a business meets the criteria above, it can apply for EFS-supported financing through any participating financial institution.

Participating Financial Institutions (PFIs)

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Participating Financial Institutions are the banks and financial intermediaries through which EFS loans are offered. The Singapore government itself does not directly lend money to companies; instead, Enterprise Singapore partners with commercial lenders who administer the loans, with the government sharing a portion of the default risk. There is a broad network of PFIs supporting the Enterprise Financing Scheme – as of recent years, roughly 17–20 financial institutions have been participating.

These include all the major local banks and a mix of international banks and finance companies, for example:

Local Banks: DBS Bank, OCBC Bank, United Overseas Bank (UOB) – Singapore’s three largest banks are key PFIs for EFS loans.
Foreign Banks: Standard Chartered, HSBC, Maybank, CIMB, RHB, and others with SME lending operations in Singapore have participated in various EFS loan programs. (Notably, HSBC has been a prominent partner especially for EFS-Green.)
Regional/Other Banks: Banks like Malayan Banking (Maybank) and CIMB (from Malaysia), RHB (from Malaysia), Bank of China, Indian Bank and others that serve SMEs in Singapore are often on the panel of lenders for specific EFS loans.
Financial Institutions/FI Companies: Apart from banks, certain finance companies and institutions such as Hong Leong Finance, Ethoz Capital, or ORIX Leasing have participated to provide asset-based financing under schemes like the SME Fixed Asset loans or hire-purchase arrangements.

According to EnterpriseSG, 19 financial institutions were supporting the SME Working Capital Loan program under EFS as of late 2022. Essentially, most commercial lenders in Singapore that serve SMEs are part of the scheme, giving enterprises a choice of where to apply. Each PFI may have its own credit requirements, interest rates, and specific loan products under the EFS umbrella, so businesses can shop around among the participating banks for the best terms. For example, one bank might offer a slightly lower rate for the EFS Working Capital Loan than another, or some banks might be more active in certain loan types (e.g. one bank might specialize in trade financing, another might focus on venture debt loans).

To apply for an EFS loan, companies approach these participating banks/finance companies directly. The government’s role (through ESG) is to evaluate the loan applications in parallel for risk-sharing, but the loan origination and approval process is done by the PFI. All major PFIs are aware of the EFS and have dedicated teams to handle these government-assisted loans. This public-private partnership model has been effective in extending credit to SMEs – in 2020, ESG worked with PFIs to disburse a surge of 32,000 loans when businesses were in need.

Examples: A small manufacturing firm might approach DBS or OCBC to apply for an EFS Working Capital Loan; a tech start-up might work with a venture debt provider like Innoven Capital (an venture lender that partnered in earlier schemes) or a bank like UOB for an EFS-Venture Debt loan; a construction company with an overseas project might seek an EFS-Project loan via Standard Chartered. With around 20 institutions in the program, SMEs have a broad range of familiar banking partners to choose from.

Recent Updates and Enhancements (2024–2025)

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In the past couple of years (2024–2025), the Enterprise Financing Scheme has seen several updates, especially as Singapore transitions out of the COVID-19 support phase into more targeted, long-term financing support. Notable recent changes and developments include:

Scaling Down of COVID-19 Enhancements: During the height of COVID-19 (2020–2021), EFS loan components were significantly enhanced to aid businesses. For example, the SME Working Capital Loan’s maximum was increased from S$300k to S$1 million and the Government’s risk-share was upped to 90% (from the usual 50–70%). Likewise, the EFS Trade Loan cap was doubled from S$5 million to S$10 million, with 90% risk-share, to help companies with trade financing during the crisis. These emergency enhancements were time-limited. By end March 2021, the elevated risk-sharing was tapered down, and in 2022 the loan quantum limits were brought back to pre-pandemic levels. For instance, after 31 March 2022 the EFS–Trade Loan maximum reverted from S$10M to S$5M per borrower and the government risk-share reverted to 70%. Similarly, the SME Working Capital Loan program stepped down to its normal cap (around S$300k–$500k) and standard risk-share (50%/70% for young firms) after the discontinuation of the Temporary Bridging Loan Programme in April 2022.
End of Temporary Bridging Loan Programme (TBLP): The TBLP was a separate COVID-era scheme that provided emergency working capital loans with government 90% guarantee. It ended on 30 September 2022, which shifted the focus back to EFS loans for ongoing support. To ensure a smooth transition, the government extended some enhanced parameters of EFS a bit longer in 2022: for example, the EFS Trade Loan’s 70% risk-share and higher limits were extended by 6 months (Apr–Sep 2022) even after TBLP ended. After that extension, the EFS resumed normal parameters. So, as of 2023 onwards, EFS loans are running under standard (pre-COVID) conditions – meaning lower government risk sharing than the extraordinary 90%, and more moderate loan caps (though still generous for most SME needs).
Expansion of EFS-Project and EFS-M&A Scope: To support post-pandemic recovery and restructuring, the Government broadened two scheme components:
- Domestic Project Financing: Traditionally, the EFS-Project Loan was meant for overseas projects only. In 2020–2022, many local firms pivoted to domestic projects (e.g. public sector infrastructure) when international travel was restricted. The enhanced EFS-Project Loan was extended until 31 March 2023 to cover domestic projects as well. Under this enhancement, companies could get project financing for local contracts, up to S$30M per borrower (versus S$50M for overseas projects). The risk-share remained 50% (70% for young firms). This was a temporary measure to help sectors like construction and engineering during the COVID recovery. After Mar 2023, the domestic extension lapsed; currently EFS-Project has likely refocused on overseas projects (as Singapore reopens and encourages companies to internationalize again).
- Domestic Mergers & Acquisitions: Recognizing that acquisitions can strengthen companies domestically as well as help them expand abroad, EnterpriseSG expanded the EFS–M&A Loan in April 2022 to include domestic acquisitions. Previously, only overseas acquisitions qualified (since the goal was international growth), but now acquiring local enterprises is also supported if it helps the company grow or move into new sectors. This expansion will be in place until 31 March 2026. By including local M&A, the scheme supports industry consolidation and capability-building at home, not just international deals. The loan parameters were unchanged – up to S$50M loan, 5-year tenure, 50% risk-share (70% for young firms or deals in emerging markets). This update allows, for example, a Singapore SME to acquire a domestic competitor or complementary business using an EFS-backed loan, as a strategy to scale up for the region.
Launch of EFS-Green (Sustainability Financing): A major addition to the EFS was the EFS-Green scheme, introduced in October 2021. This is a financing initiative focused on green and sustainable projects, under the umbrella of the Enterprise Sustainability Programme. It encourages banks to lend to companies investing in sustainability (e.g. renewable energy, carbon reduction tech) by sharing the risk. The scheme has seen a promising early uptake – as of mid-2022, 19 enterprises had taken up about S$60 million in EFS-Green loans – and helped firms like Terrenus Energy and Durapower (see examples below) to fund clean energy projects. Initially slated to accept applications until 31 March 2024, EFS-Green may be reviewed for extension or enhancement given Singapore’s ongoing green economy push. In Budget 2023, the Government also highlighted the MAS Green & Sustainability-Linked Loan Grant Scheme and other green financing incentives that complement EFS-Green. For 2024 and beyond, we can expect continued emphasis on sustainability financing; EnterpriseSG is likely to refine and possibly continue EFS-Green to catalyze more green projects by SMEs.
Adjustments to Loan Quantums and Risk-sharing: In general, post-COVID, the government has calibrated EFS support back to more sustainable levels. The maximum loan quantums for EFS loans as of 2024 are roughly: S$500k for Working Capital (for most SMEs), S$5M for Trade, S$30M for Fixed Assets, S$50M for Project (overseas) and M&A, etc. (see summary table below). Government risk-share is typically 50% of the loan (with higher 70% support for select cases like young SMEs under 5 years, or projects/M&A in riskier overseas markets). These are the “baseline” scheme parameters that were in place when EFS launched and are now largely restored. The temporary 80–90% risk-share measures ended as the economy recovered. However, the Government did extend some elevated support in specific areas through 2023 to assist sectors that were slower to recover. For example, Budget 2023 announced an extension of enhanced Trade Loan and Project Loan parameters for a few more months to support firms with remaining cashflow needs. By end 2023, those extensions had lapsed, aligning EFS with a normalizing economic environment.
Continued Support for SMEs’ Financing Needs: Even as emergency measures wind down, EFS remains a crucial pillar of SME financing. The scheme itself has been extended and continued in budgets beyond 2021, indicating the Government’s commitment to ensure SMEs have access to credit in the post-pandemic recovery phase. In Budget statements, ministers have reiterated that while “resources are finite”, support like enterprise financing will continue in a targeted manner to help firms build capabilities and transform. For instance, alongside EFS, an Energy Efficiency Grant was extended in Budget 2023 to help SMEs with rising energy costs – showing a shift to more targeted assistance (energy, sustainability, etc.) rather than broad liquidity support. Overall, 2024–2025 will see EFS functioning as a steady-state program: no longer in crisis-fighting mode, but still providing risk-sharing loans to catalyze bank lending to deserving enterprises, including in new priority areas like sustainability and innovation.

In summary, the latest updates to EFS reflect a transition from broad-based COVID support to targeted growth-oriented financing. Key changes included the end of the Temporary Bridging Loan, normalization of loan limits and risk shares, and scheme extensions or tweaks (for trade, projects, M&A) to support recovery. New elements like EFS-Green have been introduced to align with Singapore’s future economy goals. Enterprises can expect the EFS to remain available through 2025, with the government focusing on quality loans that help firms grow stronger (rather than just survive), and periodically fine-tuning parameters in response to economic conditions.

Benefits of EFS for SMEs and Startups

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The Enterprise Financing Scheme offers significant benefits for small and medium enterprises (and innovative startups) seeking funding:

Benefits

Improved Access to Capital: EFS helps overcome the financing gap faced by many SMEs. By having the government share a portion of the lending risk (50–70%) with banks, banks are more willing to extend credit to SMEs that might otherwise be deemed too risky. This risk-sharing is especially helpful for young companies with limited track record – ESG provides a higher 70% risk-share for firms <5 years old, which incentivizes banks to lend to startups that lack lengthy financial history. The result is that more SMEs get their loan applications approved than would be the case without EFS. It essentially “crowds in” bank lending to the SME segment.
Comprehensive Financing Support: The scheme covers a wide range of financing needs across different growth stages. Early-stage startups can use Venture Debt loans to fuel growth, growing SMEs can use Working Capital loans to fund operations and Trade loans to fulfill orders, mature companies can use Fixed Asset loans to invest in new capacity, and expanding companies can tap Project or M&A loans for strategic expansion. This one-stop framework means enterprises can find a relevant financing option under EFS for most major business activities. It simplifies navigation of government-backed loans – rather than dealing with a patchwork of separate schemes, businesses and banks have a unified structure and consistent terms. This clarity and breadth of support encourage SMEs to pursue growth projects knowing that financing (debt) is potentially available for various purposes.
Eased Cashflow and Growth Enablement: For SMEs, cashflow is the lifeblood of day-to-day survival and long-term growth. EFS Working Capital and Trade loans provide vital working capital that eases cashflow crunches – for example, helping a company pay suppliers on time or buy inventory to fulfill a big order. This was particularly critical during COVID-19, when EFS loans (and TBLP) provided liquidity that kept thousands of businesses afloat. Even in normal times, having access to an unsecured working capital facility up to a few hundred thousand dollars can help an SME smooth out cash cycles and take on new projects without financial strain. Meanwhile, the larger EFS loans (Project, M&A) support transformative growth moves – a company can undertake a major project or acquisition that it otherwise might not afford. By facilitating these loans, EFS enables business expansion, creation of new revenue streams, and ultimately economic growth. Studies have shown that such government-supported financing programs act as a stabilizer and growth catalyst – ensuring SMEs can continue to get credit even during downturns, which in turn helps preserve jobs and economic activity.
Lower Interest Rates / Better Terms: While interest rates on EFS loans are set by the PFIs (based on their assessment of risk), the presence of government risk-share often results in more favorable terms for the borrower. Because the bank’s risk is partially mitigated, banks may price the loans a bit lower than they would for an unsupported facility to the same customer. There are also instances of interest rate caps on certain EFS-related pandemic loans (e.g. TBLP had a 5% interest cap). Additionally, the government subsidized insurance premiums for trade loan insurance during COVID. All these translate to cost savings for SMEs taking loans. Even outside of crisis measures, the competitive nature of banks participating in EFS (nearly all big banks are in the program) means SMEs can shop around for the best rate – the scheme essentially gave rise to a market where banks compete to offer the government-assisted loans, which can drive down financing costs for SMEs.
Encourages Long-term Capability Building: By offering financing for activities like automation (via fixed asset loans), international expansion (project loans), and acquisition of other firms (M&A loans), EFS is aligned with Singapore’s broader push for companies to transform and upgrade. It nudges companies to invest in productivity and growth. For example, an SME might use an EFS Fixed Asset loan to buy an advanced machinery, improving efficiency; or use an EFS-Green loan to develop a new sustainable product line, positioning itself in a new market. These are strategic moves that might be delayed or foregone if financing was a hurdle. In that sense, EFS doesn’t just help in the short term; it can increase a firm’s competitiveness in the long run. Many government schemes give grants – EFS instead facilitates loans, which impose financial discipline but also empowerment: companies are more prudent in using loan funds (since they must be repaid), channeling them to projects with clear business returns. Ultimately, this can lead to healthier, stronger enterprises.
Preserving Jobs and Economic Stability: A macro-level benefit observed during 2020–2021 was that EFS (together with other support) helped save jobs by preventing a wave of SME failures. The availability of ~S$18 billion in low-cost loans in 2020 provided lifelines to companies, which in turn protected livelihoods of workers. Even outside crisis, easier financing means SMEs can grow and hire more staff than they otherwise would. Singapore’s economy relies heavily on SMEs (which form ~99% of companies and ~70% of employment). By bolstering SME financing, EFS indirectly supports employment and GDP growth. In 2021, for instance, ~12,600 businesses got $8.6B of loans under government schemes, 91% of which were micro and small enterprises – this broad-based support likely prevented many closures. The continued availability of EFS into 2025 ensures that SMEs have a financial buffer or springboard for the uncertainties and opportunities ahead.
Examples of Success: There have been numerous success stories of businesses benefiting from EFS. To highlight a couple:
- Terrenus Energy, a local solar energy developer, obtained an EFS-Green loan to deploy portable solar photovoltaic panels and mobile substations at Changi Business Park. This financing allowed Terrenus to scale up its clean energy project, contributing to Singapore’s renewable energy goals while growing the company’s track record in sustainable tech.
- Durapower Group, a Singapore-based advanced battery manufacturer, tapped on EFS-Green to accelerate development and distribution of lithium-ion batteries for the automated guided vehicles at Tuas Mega Port. The loan provided the working capital needed to ramp up production for this large project, showcasing how an SME can leverage EFS to participate in a major national infrastructure initiative (in this case, greening the port’s operations).
- In addition, many unnamed SMEs across sectors have quietly benefited: manufacturers financing new production lines, an F&B business getting a working capital loan to reopen new outlets post-COVID, or a tech startup securing venture debt which later helped it raise equity at a higher valuation. These examples underscore the tangible impact of EFS on real businesses – fueling expansion, innovation, and resilience.

Challenges and Criticisms

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Despite its benefits, the EFS is not without challenges or limitations. Some criticisms or issues that businesses have encountered include:

Not a Grant – Loans Must Be Repaid: It’s important to note that EFS loans are still loans – the government risk-share does not remove the obligation of the borrower to repay 100% of the loan. If a business fails to repay, the bank will pursue recovery and only then claim the government’s share of the loss. From the SME’s perspective, this means taking on debt and associated risk. Some very cash-strapped or fragile businesses may be wary of borrowing even with support, because debt adds financial strain. Unlike grants, loans could increase a company’s leverage and insolvency risk if not managed well. Thus, a challenge for entrepreneurs is to judiciously decide how much to borrow – EFS makes credit more available, but companies must still be prudent not to over-borrow. During COVID, a number of firms took on government-assisted loans; as the economy recovers, they now face the task of repaying these debts. Those who cannot service the loans may still default (and there have been some defaults). In short, EFS is a helpful tool but not a free handout, and the liability ultimately rests with the business owners (often requiring personal guarantees).
Bank Credit Requirements Still Apply: Government support reduces the risk for lenders, but it does not guarantee loan approval. PFIs still conduct their normal credit evaluations – looking at the company’s financial statements, cash flow, business model, and the owners’ creditworthiness. If a business is very new or struggling badly, banks might still decline the loan despite EFS. Some SMEs have reported difficulty in obtaining EFS loans because, for instance, they had poor credit history or insufficient income to show repayment ability. In practice, banks often require personal guarantees from directors for EFS SME loans, and sometimes collateral for larger loans, to secure the portion not covered by the government. This can be a hurdle for entrepreneurs who are unwilling or unable to pledge personal assets. Essentially, while EFS improves the odds, SMEs must still meet a baseline of creditworthiness to qualify. Businesses with high risk profiles (e.g. heavy losses, very short operating history) might find EFS loans hard to get, which has led to some frustration that the scheme doesn’t help “everyone” equally – it helps those on the cusp of bankability rather than those truly unable to borrow at all.
Awareness and Understanding: Some industry observers have pointed out that not all SMEs are fully aware of the financing options available under EFS, or they may be unsure of their eligibility. The landscape of government schemes can be confusing, especially for small business owners who don’t have dedicated finance teams. Although EFS simplified multiple schemes into one, the scheme itself has various components and conditions. A business owner might not know, for example, that an M&A loan exists to help them buy out a competitor, or that they could finance a green project under EFS-Green. Enterprise Singapore and banks have been doing outreach, but information gaps remain. The parliamentary discussion on EFS-Green noted a question: why haven’t more SMEs taken it up quickly? One reason could be that many SMEs are still learning how such green financing works or are not ready to embark on green projects yet. In general, take-up for newer schemes (venture debt, green loans) has been relatively modest initially, possibly due to lack of familiarity. The government is addressing this by working with trade associations and service providers to educate businesses on the various schemes they can tap.
Administrative and Processing Time: While having a single EFS platform is helpful, SMEs still have to go through bank application processes, which can be detailed and time-consuming. Preparing financial documents, business plans, and projections for the loan application can strain small firms with limited manpower. Some feedback from SMEs is that loan approval under EFS can take some time (though during COVID, processing was expedited considerably). There might be cases where different banks give different outcomes – an SME might apply to Bank A and get rejected, then succeed at Bank B, which can be confusing or frustrating. The interest rates on EFS loans, while better than unsecured market rates, can still be relatively high for venture debt or if the SME is high-risk (banks might price near the cap). So, a challenge is ensuring SMEs shop around; however, comparing terms across 10+ PFIs can be daunting. In response, platforms and consultants have emerged to help SMEs compare loan offerings and prepare applications, but these may incur additional fees.
Limits to Risk-Sharing Model: From a policy standpoint, one could critique that EFS still leaves a lot of risk with banks, so in a severe downturn, banks might pull back lending even with EFS if they fear defaults (since they still bear at least 30-50% of the risk). There’s also a concern that as interest rates rose sharply in 2022–2023, borrowing costs increased, potentially dampening the appetite for loans even if available. Some SMEs might find the cost of debt too high to justify, especially with inflation and other expenses rising. So the challenge is not just availability of credit, but affordability. The Government’s risk share doesn’t directly subsidize the interest (except indirectly via competition); interest rates on SME loans have gone up in line with global rate hikes. This could limit the effectiveness of EFS in encouraging new investments during a high-rate environment.
Coverage and Sufficiency: EFS is quite broad, but there could be certain niches not fully served. Very micro businesses (e.g. sole proprietors or very small outfits) might still rely more on micro-loans or personal loans, as the EFS Working Capital loan through banks might target slightly larger SMEs with some financial records. At the other end, mid-tier companies nearing the S$500M revenue cap might need even larger financing (beyond EFS limits) from capital markets. The EFS also doesn’t directly address equity financing needs (separate programs like SEEDS Capital or VC programs do that). So while EFS is a strong pillar for debt financing, an SME’s overall capital needs might require complementary solutions. Some industry feedback also suggests that venture debt uptake is still relatively low – partly because not all banks offer it aggressively (only a few specialized lenders), and startups often still prefer equity or find venture debt terms tough (warrants, high interest). This indicates that cultural and market factors also influence how widely these loans are used.

In conclusion, the challenges of EFS revolve around making sure the loans get to the companies that need them most, while those companies understand and can manage the responsibilities of borrowing. The scheme has been effective, but it’s not a panacea – businesses still need viable fundamentals to benefit. The government continues to fine-tune the scheme and provide support (like information sessions, working with corporate service providers to guide SMEs) to mitigate these challenges.

Effectiveness and Impact of EFS

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Since its inception (and especially during the COVID-19 period), the Enterprise Financing Scheme has had a significant impact on SME financing in Singapore. We can gauge its effectiveness by looking at deployment numbers and outcomes:

Uptake During COVID-19: In 2020, when the pandemic struck, the government massively ramped up loan support through EFS and related programs. Enterprise Singapore reported that it worked with PFIs to disburse 32,000 loans totaling about S$18 billion to 21,000 enterprises in 2020. This unprecedented volume of lending (much of it under EFS-WCL, EFS-TL, and the Temporary Bridging Loan) provided a lifeline to businesses. It was cited that this helped many firms with urgent cashflow needs and was instrumental in saving jobs and companies during the crisis. In 2021, as conditions improved, the reliance on such loans decreased but remained substantial: about S$8.6 billion in loans were extended to 12,600 businesses in 2021 under the TBLP and EFS-Trade Loan. The numbers show a broad reach – tens of thousands of enterprises benefitted, indicating that EFS successfully scaled up to meet emergency needs.
Reach to Smaller Enterprises: Notably, 91% of the firms that took up EFS/TBLP loans in 2021 were micro or small enterprises. The major sectors included wholesale trade, construction, and manufacturing, which are sectors with many SMEs that were hit by the pandemic. This data suggests that EFS largely hit its target demographic – the smaller companies that typically face financing gaps. The fact that such a high proportion of micro and small businesses participated implies the scheme was accessible to even very small outfits (with presumably minimal revenue), fulfilling the intent of inclusivity for SMEs.
Post-COVID Financing Support: After the peak of the crisis, EFS continued to support businesses in recovery and growth. While volumes normalized, the scheme remained a key avenue for financing. EnterpriseSG has not publicly released a full breakdown for 2022 yet, but given that enhancements continued till late 2022, we can infer a few more billion in loans were likely given out under EFS in 2022. The extended M&A and Project loans have enabled some companies to restructure or pivot – for example, we might see local industry consolidation deals happening with EFS-M&A support (though such data is often confidential, anecdotally banks have seen interest in using the M&A scheme for domestic acquisitions in sectors like precision engineering). The EFS-Green uptake, while modest in absolute number (19 firms as of mid-2022), indicates that there are early movers investing in sustainability with the help of this scheme. As awareness of EFS-Green grows, its impact could be significant for the green economy segment.
Impact on Financial Ecosystem: EFS’s implementation has also impacted the banking and finance ecosystem. By having 20+ PFIs actively participate, it essentially created a more vibrant SME lending market. Banks which previously might have been very conservative with SME lending became more willing to enter that space with government partnership. This can have a lasting positive effect – even outside of the scheme, banks have deepened their understanding of SME credit and created dedicated units to serve SMEs. Additionally, alternative lenders and financial institutions got involved (for instance, finance companies offering EFS loans), providing SMEs more avenues beyond just the big banks. The scheme also somewhat standardizes loan terms (to meet ESG’s requirements), which can improve transparency. In essence, EFS improved the flow of credit to SMEs by influencing lender behavior – a crucial impact given that financing had been cited as a challenge for SMEs historically.
SME Growth and Resilience: It is difficult to directly measure how EFS loans translated into business success (since many factors influence a company’s performance). However, we can point to certain outcomes: Companies that received financing were able to continue operations or expansions that might have been shelved. For example, if an SME used an EFS Fixed Asset loan to automate production, we may see in subsequent years that the company’s productivity and revenue increased – contributing to economic value-add. The government often tracks expected outcomes of supported projects: in 2021, ESG said that the enterprise support efforts (grants and loans combined) undertaken that year were expected to generate S$17.9 billion in value-add and create 23,300 skilled jobs in the future. While that figure is not solely for EFS, financing is a critical enabler of those projects. From a macro perspective, SME lending remained robust in Singapore despite the pandemic, with non-performing loan rates staying relatively low – indicating the support was effective but also prudently used.
Case Studies and Testimonials: Beyond the statistical impact, qualitative examples illustrate effectiveness. The earlier-mentioned Terrenus Energy and Durapower cases show how EFS-Green spurred innovation in clean energy. We also have known cases like a local precision engineering firm that used an EFS Project loan to set up a manufacturing facility overseas, successfully expanding its international footprint with that support. Another case often cited is how the Working Capital Loan (and TBLP) allowed heartland businesses (like small F&B outlets and retailers) to survive the months of shut-down and then reopen – preventing permanent closures. Government leaders have highlighted stories of SMEs that retained employees and even pivoted to new opportunities with the help of these loans. Each such story represents jobs saved or created and underscores the social impact of keeping enterprises viable.
Utilization vs. Allocation: Singapore’s approach has been to work through private sector channels rather than direct government lending. This appears to have been effective in quickly getting funds out – banks processed huge volumes in 2020. The utilisation rate of the schemes was high, meaning that the loan caps and budgets set aside were largely used. For instance, the government had initially planned up to S$20B of loan capacity; by end-2020, S$18B was taken up, which is quite a successful uptake. By 2022, as things normalized, the need lessened, which is a good sign that the economy recovered and firms didn’t need to continue borrowing extra.

Overall, the impact of the EFS can be seen in the survival and growth of many SMEs through a very challenging period and into the recovery. The scheme has solidified itself as a key part of Singapore’s enterprise support framework. Moving into 2025, as Singapore focuses on innovation, green growth, and productivity, EFS is expected to continue facilitating necessary financing in those areas. The true long-term effectiveness will be reflected in how many of today’s SMEs manage to become stronger mid-sized companies or regional champions in the years ahead, partly enabled by the financing they secured under EFS to invest in their growth. So far, the trajectory looks positive: EFS has delivered on its promise of improving financing access, and has been adaptable to the nation’s needs (from crisis survival to growth and transformation).

Summary Table of EFS Loan Types

Below is a summary of the key EFS loan types, outlining their purpose, typical maximum loan quantum, and the profile of businesses best suited for each:

EFS Loan Type	Purpose	Maximum Loan Amount (typical)	Best Suited For
SME Working Capital Loan (EFS-WCL)	Unsecured working capital for daily operations and short-term cashflow needs (e.g. paying suppliers, overheads, inventory).	S$300,000 to S$500,000 per borrower (5-year tenure max)	Local SMEs that need funds for operational expenses or bridging cashflow gaps. Especially useful for younger or small companies with limited collateral.
SME Fixed Asset Loan (EFS-FAL)	Financing for purchase of fixed assets like equipment, machinery, factory/office units, or renovation. Supports business expansion and automation through capital investments.	Up to S$30 million per borrower (capped at ~90% of asset value; up to 15-year tenure for building loans)	SMEs investing in expansion or upgrading facilities. E.g. manufacturers buying new machinery, companies acquiring their own premises, or firms automating processes with new equipment.
Trade Loan (EFS-TL)	Trade financing for import/export needs, inventory purchase, receivables financing, and overseas transactions. Includes instruments like letters of credit, invoice financing, banker’s guarantees for trade.	S$5 million per borrower (1-year revolving credit, renewable)	Businesses engaged in trade – exporters, importers, wholesale distributors – that require short-term credit to fulfill orders, buy stock, or extend supplier/buyer credit. Also useful for project-based companies needing guarantees.
Venture Debt Loan (EFS-VD)	Growth capital for innovative or high-growth enterprises, provided as mid-term loans coupled with warrants (equity options). Funds expansion, product development, market entry or other growth initiatives for startups that lack collateral.	~S$5–8 million per borrower (up to 5-year tenure; includes option for warrants)	Start-ups and young tech companies with high growth potential but few tangible assets. Ideal for VC-backed firms that want to complement equity financing with debt, to accelerate growth while minimizing equity dilution.
Project Loan (EFS-PL)	Financing to execute specific large projects (mainly overseas). Covers project costs such as purchasing equipment, hiring manpower, and working capital tied to the project, as well as performance bonds/guarantees.	Up to S$50 million per borrower (overseas project) [Temporary up to S$30M for domestic projects until Mar 2023]	Companies with sizable projects, particularly overseas. E.g. construction or engineering firms undertaking infrastructure projects abroad, or firms executing turnkey projects. Allows them to take on big contracts without straining their balance sheet.
Mergers & Acquisition Loan (EFS-M&A)	Financing for acquiring another company (equity purchase). Funds part of the acquisition cost, enabling businesses to grow inorganically via M&A – including domestic acquisitions (Apr 2022–Mar 2026) and overseas acquisitions for international expansion.	S$50 million per borrower or borrower group (up to 5-year tenure)	Enterprises pursuing M&A to expand market share, capabilities or enter new markets. Typically mid-sized companies looking to acquire smaller companies, either locally or abroad, as a growth strategy. Often used in sectors where consolidation or overseas expansion is key.
Green Loan (EFS-Green)	Financing for environmentally sustainable projects and green technology initiatives. Supports loans for various purposes (working capital, fixed assets, trade, project, venture debt, or M&A) that have a clear green angle (e.g. renewable energy projects, energy-efficient equipment, clean transportation solutions).	Varies by loan type – e.g.: - S$3M for development & deployment of green tech - S$30M for green fixed assets/infra - S$50M for green projects/M&A (within overall limits; tenure depends on loan type)	Companies investing in sustainability – e.g. renewable energy developers, cleantech startups, firms adopting green infrastructure. Any business with a qualifying green project or capex (large or small) that seeks favorable financing to pursue environmentally friendly innovation and support Singapore’s green economy goals.

Notes: All loans require the company to be at least 30% locally owned and meet EFS eligibility (generally SME criteria). Government risk-share is 50% for most loans (up to 70% for young companies <5 years, or higher-risk profiles) – this risk sharing is behind the scenes between EnterpriseSG and the PFI, but it underpins the availability of these loans. Interest rates are determined by the participating financial institutions and will vary; as of 2024, typical effective interest rates might range from ~3%–6% for working capital loans (depending on loan tenure and borrower risk) to higher for venture debt. The figures above are general maxima; the actual approved loan amount depends on the borrower’s financial capacity and needs.

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