Nine in 10 SMEs succeeded in applying for debt financing

But arrears from customers remain a challenge.

Out of the 13% of small to medium-sized enterprises (SME) that sought external financing, 90% that applied for debt financing succeeded in their applications, SPRING Singapore revealed.

According to its SME financing survey, the most commonly cited purpose by over 60% of SMEs that sought external financing in 2017 was for cash flow management. Bank loans were the most popular form of external financing across SMEs of different sizes, industries and stages of development.

Majority of the remaining 87% that did not turn to external financing and said that they had sufficient funds to operate, whilst 9% did not want to borrow.

The survey also found that larger SMEs were more likely to seek external financing given their growth needs and the approval rate for debt financing was higher compared to micro companies.

Meanwhile, 64% of SMEs still faced some form of delay in getting payments from customers. SMEs also expect delays in customers’ payments to become a challenge for them next year.