Small and micro enterprises in Singapore have long been the backbone of the local economy, making up the majority of businesses and employing a significant portion of the workforce. Yet when it comes to adopting new technologies, especially artificial intelligence, many of these firms face real challenges. Traditional support schemes often require minimum employee counts or revenue thresholds, leaving the smallest players unable to qualify. That is set to change with the introduction of a new S$10 million grant initiative paired with bank support to make AI adoption more accessible to these businesses.

Breaking Down the New Support Initiative

The Association of Small and Medium Enterprises (ASME) announced the new funding support at the close of its annual AI Festival Asia on January 23, 2026. The scheme is specifically aimed at micro and small enterprises, defined as companies with 30 or fewer employees. These businesses are eligible for government grant support worth up to S$10 million in total, with additional bank financing options to help with upfront costs.

The initiative addresses two major barriers to technology adoption for small firms:

• Qualification barriers for existing grants: many traditional schemes set minimum requirements that exclude micro enterprises.
   

• Cash flow challenges:  technology projects, particularly in AI, often require significant upfront investment long before grants are reimbursed.
   

To bridge this gap, ASME has ringfenced existing government grants through collaborations with relevant agencies so that even the smallest firms can qualify. At the same time, a memorandum of understanding with UOB will allow eligible businesses to access loans to ease cash flow while waiting for their grant reimbursements. This lifeline is especially important for firms that may otherwise stall technology projects due to upfront costs.

What This Means for Small Businesses

The funding support is intended to help small and micro firms in a few key areas:

• Adoption of AI tools into existing business workflows
   

• Hiring or training specialist staff who understand both core business functions and AI technology
   

• Reducing the financial risk associated with trying new digital tools that could boost efficiency and competitiveness
   

Given that micro and small enterprises account for 94 per cent of all business entities in Singapore and hire almost half of the local workforce, this initiative could have wide-ranging benefits for productivity and growth across the economy.

Industry and Government Collaboration

The announcement also highlighted broader collaboration between government, industry partners and educational institutions. For example, an AI Foundry initiative backed by Lenovo, with a S$1 million commitment to prototype projects, will pair ITE students with small enterprises to co-develop AI solutions. This not only supports digital transformation but also builds future tech talent right within the ecosystem.

Officials have indicated that additional public initiatives to support small and micro firms in AI adoption will be revealed in the coming weeks, including resources for companies that are just beginning their digital journey.

Why This Matters

This development represents a meaningful step toward more inclusive technology support for all sizes of enterprises, especially those that have traditionally been left out of mainstream digitalisation efforts due to structural limitations. By making AI and digital tools more accessible, Singapore is helping its smallest businesses stay competitive, build resilience and seize new opportunities in a fast-evolving business landscape.

 

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