The Scope of Government Support for SMEs

As global population continue to skyrocket, small-medium-enterprises (SMEs) is becoming a key player in a nation’s economic and social development goal. These SMEs offer income and jobs and directly contribute to gross domestic and national products to say little of the additional taxes that they generate. However, these SMEs often have limited growth capacities because they have, as their classification implies, smaller capitalization and limited capacity to compete with major corporations especially trans or multinational corporations which have vast resources and market. 

In order to encourage start-up SME’s and support the growth and success of existing ones, government plays a vital role. It is through government interventions that the balance of power in commerce and industry can be maintained. 

Government assistance to SMEs can take many forms. Indirectly, tax holidays or incentives, or performance or merit awards come a long way in encouraging these SMEs and providing a model for others to follow. Directly, setting up accessible loans for start-up capital or additional capital infusion is a common approach for SME funding from the government. This however has been proven inefficient and high-risk since they are not merit-based systems. As such, providing financial aid or grants for utilization in various growth initiatives can provide necessary boost in expansion and competitive potentials of SMEs and at the same time provide government a more progressive, merit-based and safe intervention option.  

Grants of this kind can cover a broad range of needs of SME’s. Financial support for product or service development that can help SMEs improve the quality of their good and/or services are a constant necessity and government can augment operational costs through grants for this purpose. Training or other enhancements on brand and marketing strategy development, business excellence, business strategy innovation, enhancing quality and standards, improving service excellence are vital areas for improving SME goods and services. 

Government funding for human resource or social capital development through capacity-building or capacity development trainings can help improve the individual value of employees and increase level of professionalism, competency and administrative efficiency of small businesses. Strengthening technical knowledge and skills, improving administrative efficiency and management capacity of employees not only provide companies with a well-equipped manpower but almost automatically improve their staff profile and therefore competitive advantage. Grants for productivity and growth that help accelerate the business expansion through adoption of appropriate information-communication technology solutions can help SMEs become more efficient, productive and competitive. Modest assistance in website constructions, technology innovations, establishing on-line presence, workflow automation, digital advertising are among the common needs of SMEs in this area of operations. 

There are also some budgets that are funding research and development (R&D) finances for exploration of potential other growth areas and direction including feasibility studies for overseas expansion and global market readiness studies. Additional supports for innovation and credits like investing in new designs for your products, acquisition and leasing of IT automation equipment, licensing of intellectual property rights, registration of patents, trademarks, designs and plant varieties can help SME establish and strengthen corporate security in terms of product and other IP related security concerns while at the same time providing additional source of income (i.e. royalties) and value add-ons.