Government relief measures paying off for SMEs: DBS Survey

Photo by Priscilla Du Preez

The recent DBS SME Pulse Check Survey signalled that the Singapore Government’s relief measures are paying off, with only three in ten SMEs now flagging cash flow concerns as a top priority, compared to over seven in ten when the same question was asked in early February as the COVID-19 situation began unfolding.

This 40-percentage point drop indicates that the combined efforts of the Government and financial institutions in supporting SMEs in their working capital needs are bearing fruit, giving SMEs much-needed relief from intense cashflow pressures that they would otherwise be facing.

When asked what their most immediate priority was, medium-sized SMEs seemed most bullish, with one in two responding that creating new revenue streams to capture growth opportunities would be their focus coming out of the extended circuit breaker period.

Meanwhile, small SMEs ranked access to working capital to keep their businesses afloat and exploring and creating new income streams as equally important.

This survey was conducted with over 300 SMEs in Singapore in the last week of the extended Circuit Breaker period in end-May.

Joyce Tee, Group Head of SME Banking, DBS, shared that such trends provide useful insights to both financial institutions and policymakers on what needs to be done to continue supporting the SME community. “Availing working capital support to viable SMEs continues to be important, but that alone is insufficient in preparing our SMEs for the road ahead.

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“With SMEs starting to focus on building new income streams, banks, industry associations and the Government can step up by offering innovative solutions for our local enterprises to identify and create new revenue opportunities. In doing so, we are helping our SMEs become more resilient so that they are better prepared to ride through the oncoming economic headwinds,” she continued.

SMEs surveyed were also hopeful for further financial relief from the Government to help them cope with the ongoing crisis, with about 65% flagging that the Government should continue to provide additional support in the form of cash flow relief, tax relief or additional grants.

Digital transformation and workforce upskilling low priorities

In preparing for future growth opportunities, digital transformation and workforce upskilling rank among lowest priorities – even as SMEs take first steps in digitalising amid COVID-19.

These findings are despite repeated emphasis on the importance of preparing for a digital economy and skills upgrading to survive in the post COVID-19 economy.

Just over 10% indicated that digital transformation would be an immediate focus. However, this could be an indication that SMEs have already started their digital transformation projects amid the extended COVID-19 circuit-breaker period to optimise processes and reach out to a growing online consumer base.

When asked what was holding them back from prioritising their digital journeys, close to half of SMEs surveyed shared that insufficient knowledge of the digital solutions available, a poor understanding of the benefits of going digital, and inadequate employee capabilities were the top reasons hindering their digital transformation efforts.

However, some 15% of respondents want banks to provide more advisory services on digital transformation, hinting at a degree of openness among SMEs to continue transforming their businesses digitally.

At the same time, workforce upskilling was ranked as one of SMEs’ lowest priorities, with only 3% of respondents flagging this as an immediate focus.

SMEs keen on making a positive difference to the community

A silver lining that has emerged from the extended Circuit Breaker period is that eight in ten SMEs are now starting to think beyond their own business and to be more sensitive to the needs of the wider community.

DBS has started partnering its SMEs to give back during this time of economic uncertainty. The bank is currently working with 23 of its SMEs and social enterprises in the F&B sector to provide some 400,000 meals to the elderly and low-income in Singapore.

In doing so, SMEs are able to make a real difference to the lives of those who need a helping hand, even as DBS provides much-needed support to its clients in the F&B sector.