4 in 5 SMEs fail in financing assessments

55% reported losses in their financials.

Amongst small to medium enterprises (SMEs) in Singapore, 81% are not fit for business financing, consultancy firm Linkflow Capital revealed.

According to the data from the firm, 863 of the 1065 users in its loan assessment platform are not eligible for financing.

The most common reason for potential rejection of loan applications is SMEs' reports of financial losses. Linkflow Capital said that 55% of recorded SMEs registered losses in their financials.

Another reason is the age of the company. Around 21% of startups are incorporated in less than a year.

Half of the users, of 52%, have an annual revenue of below $300,000 and low operating cash flow, which also leads to rejection when it comes to financing eligibility.

"Due to Singapore's current slowdown in the domestic economy, SMEs might face challenges obtaining financing from mainstream banks and financial institutions," Linkflow Capital said.

Here's more from Linkflow Capital:

The Singapore government has introduced measures to help SMEs improve access to financing such as the SME Working Capital Loan program introduced in June 2016.

Finance companies also had their cap on unsecured business loans extended to SMEs raised from 10% to 25% of its capital funds in February 2017.

There are also alternative business lending platforms such as P2P crowdfunding catering to SMEs who might not qualify for traditional banking facilities.

With a slew of other government led initiatives such as the SME Talent Programme, the Capability Development Grant and SME Go Digital Programme, small businesses have multiple sources of assistance to restructure, survive and thrive in the new age of business disruption.

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