Starting Your Business Right – Raising Capital For Your Business

Starting your business right in Singapore: Raising Capital for your Business. “When starting out, ensure your business has adequate capital for growth.” – Sudhir Ruparella Consider whether you want to raise debt or equity when running or starting a business Entrepreneurship and capitalising opportunities go together. Starting a business requires money that you likely won’t have right away. This is why you need to seek out ways to acquire capital. Most entrepreneurs incorporate a business with limited amount of capital. However, there are plenty of options available for you in your effort to raise capital. Opening your business to investors, partnerships and venture capitalists will also be potential assets towards raising capital for your business. There are also opportunities for you to apply for grants and loans through governmental bodies and business professionals like us. Know Your Debts (1) You are borrowing money to start your business (2) You pay interest (3) Debt holders have no ownership in your business In Debt financing as a business owner, you can apply for a business loan from a bank or receive a personal loan from other parties or lenders, all of which you must pay back. The advantages of debt financing are bountiful. First, the lender has no control over your business. Once you pay back your loan, your relationship with the financier ends. Second, the interest you pay is tax-deductible. Third, it is easy to forecast expenses as loan payments do not fluctuate. Know Your Equity (1) Obtaining investment into your company to start your business (2) You pay shareholders a dividend (3) Shareholders own a part of your business, i.e. you give up ownership In Equity financing, it is very similar to debt financing, just that it involves investors. You could offer shares of your company to anyone you deep necessary and other small investors. However, equity financing often involves venture capitalists or angel investors, who provide capital for your business start-up, usually in exchange for convertible debt or ownership equity. The advantage of equity financing is that the investor holds all of the risks. If your company fails, you do not have to pay the money back. You will in fact have more cash available because there are no loan payments. Furthermore, investors take a long-term stand and are able to give you time to grow your business. The disadvantage, however, is that equity ownership is usually more expensive – You may be required to pay a yearly dividend to your shareholders. Looking into an infusion of capital, be it debt or equity, from private or institutional sources can drive your business to greater heights. There are various financing methods you may opt for, but do take note of the benefits and costs involved. As someone starting out, you don’t need to know all the answers, don’t be afraid to ask questions, there’s a lot of free quality resources and friendly professionals in Singapore. Lilia Pritchard Enjin Starting a company in Singapore – Learn about the grants you may be able to tap on to fuel your business. “The secret of getting ahead, is getting started.” – Mark Twain What is the business scene in Singapore? Small and medium-sized enterprises (SMEs) have grown to be an increasingly significant contributor to Singapore’s economy. In fact, in 2020 alone, 70% of employment in Singapore was fuelled by SMEs; 43% of the $428 billion nominal value added also had come from SMEs.   Thus, it makes sense that in the light of the COVID-19 pandemic casting a shadow over the economy, the government has put in place a plethora of schemes especially targeting the SME sector, such that businesses get all the support they need. If you are a SME business owner, you may find the following overview useful! Find out about the 7 grants that are game-changing for your business. 1. The Temporary Bridging Loan Program (TBLP) The Temporary Bridging Loan Program (TBLP) has been further extended for 6 months, from 1 October 2021 to 31 March 2022.  TBLP aims to provide access to working capital for SMEs’ business needs.  Key points   Before TBL Program, corporate SME loans’ interest rates averaged between 5-8% p.a. The current TBL Program offers interest rate capped at 5% per annum (p.a.), and averages about 2.75-4.5% p.a. (simple rate). This means that for every $100 you borrow, you only need to pay on average $2.75 to $4.50 in interest.   Last day to apply: 30 September 2021  Maximum loan quantum is S$3 million per borrower. An overall borrower group is subject to a higher limit of S$20 million.   The maximum repayment period is 3 to 5 years.   What can I use TBLP for?   Immediate expenses, such as if any of your equipment suffers from an unexpected breakdown   Interim business expenses while your company is seeking other long-term financing  Alleviate any cash flow difficulties  Fund expansion plans, e.g, relocating to a new office Am I eligible?   Be a business entity that is registered and physically present in Singapore At least 30% local equity held directly or indirectly by Singaporean(s) and/or Singapore PR(s), determined by the ultimate individual ownership  How to apply?   Approach PFIs: : SMEs may first approach any Participating Financial Institutions (PFIs) to apply for the loan (subject to banks’ credit approval). Refer to the list here for which PFIs you may approach.   Approach Loan brokers: Tap on our experiences and network in helping SMEs get loans. (insert link to why should businesses get loan brokers).  NOTE: You’ll be happy to hear that Tisch Global has helped many of our clients apply successfully for the TBLP. Additionally, some banks do offer preferential rates for existing clients. Drop us an email at to enquire about your loan application needs.  2. P-Max P-Max is a Place-and-Train (PnT) programme under Workforce Singapore (WSG) that aims to help SMEs in terms of human resources and help job-seeking PMETs into suitable SME jobs.   Hiring SMEs can enjoy up to 90% course fee subsidy for PMET, SME training workshops and Age Management workshop (applicable for P-Max for Older Worker only).  Eligible SMEs will receive a one-time $5,000 Assistance Grant or $10,000 Assistance Grant (P-Max for Older Workers only)