The outbreak of the coronavirus has slowed the global economy and most companies are in a state of flux. As this epidemic evolved to a pandemic, it is projected that this ordeal may last for at least a year. In the face of this uncertainty, many Small Medium Enterprises (SMEs) are already struggling to maintain their financial stability. Fortunately, financial aid is quickly made available to companies in Singapore to help them resuscitate their businesses and support employees who are affected by the on-going crisis. What schemes exist and what else can small businesses do to stay afloat during these uncertain times?
Government Aid for SMEs
With the experience from the SARs pandemic that caused a major financial downturn in Singapore in early 2000, the government and various financial bodies are quick to devise financial aids for businesses to prevent the economy from declining further. For example, the Ministry of Finance has announced that SMEs will receive about 70% of the Wage Credit Scheme (WCS). The Wage Credit Scheme will provide more than S$600 million in payouts by March 31. The payouts will co-fund 15% of qualifying wage increases given in 2019, 2018, and 2017 to more than 700,000 Singaporean employees earning gross monthly wages of up to S$4,000.
SMEs do not need to apply for the WCS, but will need GIRO or PayNow Corporate in order to receive the funds. Businesses should receive letters from the Inland Revenue Authority of Singapore (IRAS) by the end of March.
Specific to SMEs, the first government stimulus package provides subsidies of 8% of wages for 3 months through its Job Support Scheme to help workers stay employed through this period.
Financial Institutions Extending Help to SMEs
Since the outbreak, major banks in Singapore have also stepped up to offer relief assistance for SMEs. These banks rolled out a variety of measures to allow customers to restructure their loans, delay principal repayment for loans, apply for bridging loans and even relief packages that can tie them through short-term cash flow issues. The table below lists some of the relief efforts available to small businesses.
Besides banks, some private entities have also joined hands to set up a $5 million SME Help Fund to extend short-term loans to help local SMEs that are facing temporary cash-flow issues amid that pandemic. If you are not currently a business loan customer, we recommend comparing the best financing options and rates before applying for a loan.
Enhanced Insurance Coverage for Employees
Medical costs amid the Covid-19 pandemic are another looming expense that creates a financial threat to SMEs. To provide relief in this area, some health insurers have launched enhanced coverage to cover employees of companies that are already insured under their group employee benefits policies. Depending on your company's insurer, you may be eligible for some additional benefits.
How to Combat the Covid-19 Crisis as an SME
To combat the on-going crisis, here are some best practices that companies can explore to stay resilient and competitive during this troubled time.
Business Continuity Plan (BCP)
Since SARs pandemic in 2003, many businesses already have a BCP to help them ride through potentially threatening periods. A BCP ensures that employees and company assets are protected and can function effectively even when faced with disasters. For leaner SMEs, one of the easiest ways to exercise a BCP is to deploy a work-from-home (WFH) policy to prevent the spread of the coronavirus within the work premise. This policy is popular among tech giants like Facebook, Google and Amazon, which have already implemented remote working policies.
To exercise the WFH policy, SMEs must first assess employees’ suitability based on their nature of work, data privacy concerns and availability of software and hardware for them to be fully functional. It is important to set clear expectations like the employee’s daily work schedule, overtime policy, instructions for reporting personal injury and damage to company equipment, and protection of proprietary company information. Finally, it can be helpful to stipulate the period in which the policy will be in place. Whether the WFH policy will last a week or a full month, communicating a detailed policy will ensure that both the company and employees are in-sync.
Implement Employee Training & Development
SMEs that are going through a slower period of time may choose to make use of this time by introducing reskilling and training programs to their employees. This type of initiative can help them be more competitive when the economy stabilises.
Workforce Singapore (WSG) has implemented The Adapt & Grow programme that is designed to help companies receive wage subsidies and training support. Furthermore, WSG is collaborating with the Singapore Economic Development Board, Enterprise Singapore and the Supply chain and Logistics Academy to introduce a three-month-long redeployment programme for rank-and-file supply chain and logistics employees to reskill and prepare them for industry disruptions.
Adopt Cost Cutting Measures
Unfortunately, not all businesses can get by in a downturn without cutting their costs. In fact, a well deployed cost-cutting strategy is essential for any SMEs to stay out of the red. Some possible ways to reduce costs include pay freezes, minimised travel expenses and reducing operating hours. While these are difficult steps to take, these measures can help prevent even more extreme measures such as layoffs.
Resilience in the Face of Crisis
Just as seasons change, the economy will also experience ups and downs. No business is without risk, and it is only when SMEs exercise careful business resilience planning that they can mitigate the impacts of sudden disruptions such as the Covid-19 pandemic. Instead of succumbing to knee jerk reaction, meticulous planning and strategic moves are the best ways to ensure that businesses can improve performance while minimising risk.
The article How Can SMEs Survive the Coronavirus? originally appeared on ValueChampion's blog.
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