{"id":11949,"date":"2024-04-24T02:28:11","date_gmt":"2024-04-23T18:28:11","guid":{"rendered":"https:\/\/dollarsandsense.sg\/business\/?p=11949"},"modified":"2024-04-24T02:28:13","modified_gmt":"2024-04-23T18:28:13","slug":"guide-enterprise-financing-scheme-fixed-asset-loans","status":"publish","type":"post","link":"https:\/\/dollarsandsense.sg\/business\/guide-enterprise-financing-scheme-fixed-asset-loans\/","title":{"rendered":"Complete Guide To Enterprise Financing Scheme – Fixed Asset Loans (EFS-FA) In Singapore"},"content":{"rendered":"\n

Some businesses require the use of expensive machinery such as forklifts or cranes, manufacturing machinery, or scientific machines such as lab equipment. Businesses that need such equipment need a high amount of capital in order to start up or expand, and this is where the Enterprise Financing Scheme – Fixed Asset Loans<\/a> comes into play, since it is able to help these businesses minimise its capital outlay.<\/p>\n\n\n\n

The EFS-FA is a government-backed loan, which allows businesses to purchase new or used assets for local or overseas facilities. This also allows companies to finance their purchase or construction of government- and commercial-built factories and business premises.<\/p>\n\n\n\n

Read Also: Complete Guide To Commercial Property Loans For Singapore Businesses<\/a><\/em><\/strong><\/p>\n\n\n\n

Eligibility<\/strong><\/h3>\n\n\n\n

To be eligible for this loan, the company must be registered and operating in Singapore, with at least 30% local shareholding held by a Singaporean or PR.<\/p>\n\n\n\n

To qualify as a SME, the company should not have a Group revenue exceeding $100 million and have no more than 200 employees.<\/p>\n\n\n\n

Read Also: Guide To Understanding A Revolving Term Loan And How It Can Help Businesses With Cash Flow<\/a><\/em><\/strong><\/p>\n\n\n\n

Loan Details<\/strong><\/h3>\n\n\n\n

Each borrower is limited to borrowing $30 million, and this limit is shared between the company and other parent or subsidiary companies (also known as the borrower group). The borrower group is further subject to a total loan exposure limit of $50 million.<\/p>\n\n\n\n

The maximum repayment limit is 15 years, and the interest rate is subject to the financial institution\u2019s assessment of risks involved.<\/p>\n\n\n\n

Read Also: Guide To Claiming Capital Allowances For Businesses In Singapore<\/a><\/em><\/strong><\/p>\n\n\n\n

How Risk Sharing<\/strong> Works<\/h3>\n\n\n\n

Government-backed loans are still administered by financial institutions, but the risk is 50% shared with EnterpriseSG. For young companies (less than 5 years from date of incorporation), or companies operating in challenged markets (countries with an S&P rating of BB+ and below), EnterpriseSG may take on a risk share of 70%.<\/p>\n\n\n\n

One common misconception is that this reduces the liability of the borrowers, which is untrue. Risk sharing does not absolve the company from any debt \u2013 in the case of a default, debt collection proceedings will still be performed first before the lending institution can make claims on the outstanding remainder from EnterpriseSG.<\/p>\n\n\n\n

Risk sharing merely helps financial institutions to lower the risk of giving out the loan, thereby enabling these institutions to give out more favourable terms for the loan.<\/p>\n\n\n\n

Read Also: From Loss Carry-Back Relief To BIPS: How To Save Corporate Income Tax In Singapore<\/a><\/em><\/strong><\/p>\n\n\n\n

Comparison With Other Loans<\/strong><\/h3>\n\n\n\n

The SME Fixed Asset Loans are not the only option for business financing; however the other loans limit the borrower to a much smaller sum, with a shorter repayment period.<\/p>\n\n\n\n

The Enterprise Financing Scheme – Project Loan (EFS-PL) allows for a borrower group limit of up to $15 million for domestic projects, which is only half of the maximum limit of $30 million of the EFS-FA, even though it covers the same categories. This loan is more useful for companies who are intending to expand overseas, since the loan limit for overseas projects is $50 million.<\/p>\n\n\n\n

The Enterprise Financing Scheme \u2013 Green (EFS-Green) offsets the same loan amount for equipment and machinery or factories related to green initiatives, but EnterpriseSG provides a 70% risk-share for this category.<\/p>\n\n\n\n

Read Also: [2024 Edition] Complete Guide To SME Business Loans In Singapore<\/a><\/em><\/strong><\/p>\n\n\n\n

Financing For Fixed Assets<\/strong><\/h3>\n\n\n\n

OCBC Equipment and Machinery Financing<\/a> is a loan which allows you to finance up to 90% of the valuation or purchase price of equipment and machinery for a period of up to 8 years. The interest rate is between 4-6%, and companies can get a loan approved within 48 hours.<\/p>\n\n\n\n

Companies must be incorporated in Singapore for at least 2 years, and at least 30% owned by Singapore citizens or Permanent Residents.<\/p>\n\n\n\n

This loan offers the option of tapping on a government-assisted scheme. While government-assisted schemes may offer more favourable loan terms, there may be more steps for application.<\/p>\n","protected":false},"excerpt":{"rendered":"Risk-sharing doesn\u2019t reduce debt liability, but it allows lending institutions to offer more favourable terms for the loans.\n","protected":false},"author":28,"featured_media":11951,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[92],"tags":[860,748,1038],"yoast_head":"\nComplete Guide To Enterprise Financing Scheme - Fixed Asset Loans (EFS-FA) In Singapore | DollarsAndSense Business<\/title>\n<meta name=\"description\" content=\"The Enterprise Financing Scheme \u2013 Fixed Asset Loans (EFS-FA) allows loans of up to $30m for a period of up to 15 years.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/dollarsandsense.sg\/business\/guide-enterprise-financing-scheme-fixed-asset-loans\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Complete Guide To Enterprise Financing Scheme - 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