Emergence of private markets and exchanges as an alternative source of financing for small- and medium-sized enterprises (SME) in Singapore

• Main Author: ANG, Ser Keng
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2021
• Subjects: Private markets; SME; Financing; private exchange; crowdfunding; Singapore; Asian Studies; Entrepreneurial and Small Business Operations; Finance and Financial Management
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/6904; https://ink.library.smu.edu.sg/context/lkcsb_research/article/7903/viewcontent/NJACM5_2SP21_06_pvoa__1_.pdf
• Institution: Singapore Management University

Small- and Medium-sized Enterprises (SMEs) are the engine for growth for any economy, whether big or small and developed or emerging. In the US, small firms with less than 500 employee represent 99% of all employers, provide over 80% of net new jobs and account for about one-half of the national workforce. Singapore is no exception. Hence, the well-being of the SME sector in Singapore bears huge importance in the growth and development of its economy.In practice, financing of private companies, particularly small companies, is a challenge. In general, their small size makes private firms more susceptible to exogenous shocks. This makes lenders assess SMEs as riskier credits, and thus more hesitant with financing. While the methods for regular short-term financing, such as working capital financing, factoring and export financing, continue to be relevant, the scene for longer term financing of SMEs has evolved rapidly over the last several years. This paper investigates such shifts in the market and expounds how such changes can affect both SMEs’ choice(s) of financing as well as the overall development of this critical sector & Singapore’s capital market.