An Evaluation Of The Impact Of Enterprise Singapore’s Loan Schemes

Enterprise Singapore (ESG)’s loan schemes complement commercial lending and avail financing to local small- and medium-sized enterprises (SMEs)  through the sharing of the risk of loss on loans with participating financial institutions. This study evaluates the impact of three ESG loan schemes (viz. Equipment loans, Micro loans and Enhanced Micro loans) on the revenue and exit probability of firms that received loans under these schemes. 

Our findings show that ESG’s loans had a positive impact on firms’ revenue, possibly by helping them with their working capital needs and hence allowing them to expand sales. We also find that Enhanced Micro loans had the largest impact on the revenue of firms – on average, for each dollar of loan received, the revenue of firms increased by $8.30 to $12.20 one year after receiving the loan.

In terms of exit probability, we find that ESG’s loans did not have a significant impact on the exit rate of firms. This suggests that ESG’s loans had not inadvertently prevented the exit of firms and inhibited the natural functioning of the market. 

The views expressed in this paper are solely those of the authors and do not necessarily reflect those of the Ministry of Trade and Industry or the Government of Singapore. 

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