Back to Resources
Pricing & Strategy13 min read
AI Grants in Singapore: EDG, PSG & EIS Guide (2026)
Navigate Singapore's grant landscape for AI projects — what qualifies, what doesn't, and how to structure your application.
Overview of Singapore's AI Funding Landscape in 2026
Singapore's government has committed over S$1 billion to AI development through the National AI Strategy 2.0, and a meaningful portion of that flows to SMEs through grants, tax incentives, and co-funding schemes.
For a Singapore SME looking to implement AI, three programmes are most relevant:
• Enterprise Development Grant (EDG) — Co-funds custom AI development and implementation projects. The most flexible and valuable scheme for bespoke builds.
• Productivity Solutions Grant (PSG) — Subsidises adoption of pre-approved AI and productivity tools. Faster approval but limited to listed solutions.
• Enterprise Innovation Scheme (EIS) — Tax deductions for qualifying AI research and development expenditure. Not a cash grant but can significantly reduce your effective cost.
Beyond these three, sector-specific programmes exist:
• Financial Sector Technology and Innovation (FSTI) scheme — For fintech and AI in financial services (MAS-administered)
• Legal Technology Platform Programme — Specific to law firms adopting technology (IMDA + Law Society)
• Healthcare AI Innovation Call — For AI in healthcare delivery (MOH + HIMS)
The vast majority of Singapore SMEs pursuing AI will use one or more of EDG, PSG, and EIS. This guide focuses on these three.
Important 2026 updates:
• EDG co-funding ratios were revised in Q1 2026 — SMEs in "priority sectors" (including professional services) now qualify for up to 70% co-funding
• PSG has expanded its pre-approved AI solutions list significantly, with 40+ AI-specific tools now listed
• EIS qualifying criteria for AI were clarified in the 2026 Budget, with explicit inclusion of prompt engineering and AI system integration as qualifying activities
The key insight: these grants can be stacked in certain configurations, and the choice between them depends on whether you're buying off-the-shelf or building custom.
Enterprise Development Grant (EDG): The Main Funding Vehicle
EDG is Enterprise Singapore's flagship grant for business transformation. For AI projects, it falls under the "Innovation and Productivity" pillar.
What EDG covers for AI projects:
• Third-party consultancy fees (scoping, design, project management)
• Software development costs (your AI vendor's build fees)
• Implementation and integration costs
• Training for your staff to use the new system
• Cloud infrastructure costs during the project period (not ongoing)
• Data preparation and cleaning (often the largest hidden cost in AI projects)
What EDG does NOT cover:
• Hardware purchases (computers, servers) — capital expenditure is excluded
• Ongoing subscription fees after project completion
• Internal staff salaries (your own team's time)
• Marketing or sales activities
• Costs incurred before the application is approved
Co-funding ratios (2026):
• Standard SME: 50% co-funding
• Priority sectors (professional services, manufacturing, healthcare): up to 70%
• Businesses significantly affected by economic disruption: up to 80% (case-by-case)
Eligibility criteria:
• Business entity registered and operating in Singapore
• Minimum 30% local shareholding
• Business must be in a financially viable position (profitable or clear path to viability)
• Project must have clear, measurable business outcomes
• Must use a qualified third-party vendor (not in-house development)
• Typically at least 3 local employees (no hard minimum but very small firms may face scrutiny)
Application process:
1. Register on the Business Grants Portal (BGP)
2. Submit project proposal with vendor quotation, project timeline, and expected outcomes
3. Enterprise Singapore evaluates (typically 8–12 weeks)
4. If approved, receive Letter of Offer with conditions
5. Begin project (only after approval — costs before LOF are not claimable)
6. Submit milestone claims during the project (for projects over 6 months)
7. Submit final claim with evidence of completion and outcomes achieved
8. Disbursement (4–8 weeks after final claim approval)
Realistic timeline: 3–4 months for approval + project duration (6–12 months) + 2 months for disbursement = 11–18 months total.
Pro tip: Enterprise Singapore values specificity. An application that says "implement AI to improve productivity" will be rejected. An application that says "implement AI-assisted contract review to reduce document turnaround time from 4 hours to 45 minutes, targeting 40 contracts per month, with a projected annual saving of S$86,400 in associate time" will succeed.
Productivity Solutions Grant (PSG): Pre-Approved AI Solutions
PSG is the simpler, faster alternative to EDG — but only for off-the-shelf solutions listed on the GoBusiness grant portal.
How PSG works:
Enterprise Singapore pre-approves specific software solutions and vendors. You pick a solution from the list, get a quotation from the approved vendor, and apply. Approval is faster than EDG because the solution has already been vetted.
Co-funding ratio: Up to 50% of qualifying costs (reduced from 80% during COVID-era elevated support).
Maximum support: S$30,000 per solution category. You can claim for multiple categories if they're genuinely different solutions.
What's on the AI solutions list (2026):
The GoBusiness portal lists AI solutions across categories including:
• Customer relationship management with AI features
• AI-powered accounting and bookkeeping
• HR management with AI screening and matching
• AI chatbots and customer service automation
• Document management with AI classification
• Inventory and supply chain AI optimisation
Important limitations:
• No custom builds. PSG only covers solutions exactly as listed. Customisation beyond standard configuration may void eligibility.
• Vendor lock-in. You must use the pre-approved vendor. You can't take the grant and use a different provider.
• Lower ceiling. S$30,000 per category limits PSG to smaller implementations.
• Pre-defined scope. The solution must be implemented as described in the pre-approval. Adding AI features not in the approved package isn't covered.
When PSG makes sense:
• You need a standard AI tool (chatbot, document classifier, CRM with AI)
• Your budget is under S$60,000 total (S$30,000 after 50% grant)
• You want faster approval (4–6 weeks vs 3–4 months for EDG)
• You don't need heavy customisation
When PSG doesn't make sense:
• You need a custom AI system built for your specific workflows
• Your project exceeds S$60,000 total cost
• You need on-device deployment (most PSG solutions are cloud-based)
• You require Singapore-specific training data or models
Practical advice: Check the GoBusiness Grant Portal for the current list. If your needs are met by a listed solution, PSG is the fastest path to funding. If not, EDG is your route.
Enterprise Innovation Scheme (EIS): Tax Deductions for AI R&D
EIS is not a cash grant — it's an enhanced tax deduction that reduces your taxable income for qualifying innovation activities, including AI development.
How EIS works for AI projects:
Qualifying expenditure on AI research and development receives a 400% tax deduction on the first S$400,000 of qualifying costs, and a further 100% deduction thereafter. This means for every S$1 you spend on qualifying AI R&D, you reduce your taxable income by S$4 (up to the cap).
In practical terms (at the 17% corporate tax rate):
For S$100,000 of qualifying AI R&D spending:
• Tax deduction = S$400,000 (400% × S$100,000)
• Tax saving = S$400,000 × 17% = S$68,000
• Effective cost of your AI R&D = S$100,000 - S$68,000 = S$32,000
That's a 68% effective subsidy — more generous than EDG's 50% in dollar terms, though you receive it as reduced tax rather than cash.
What qualifies as AI R&D under EIS:
• Development of new AI models or algorithms for your business
• Training AI systems on proprietary data
• Prompt engineering and AI system integration (explicitly confirmed in 2026 Budget)
• Building custom AI applications that represent novel solutions for your industry
• Systematic experimentation to improve AI accuracy or performance
What does NOT qualify:
• Purchasing off-the-shelf AI software (no R&D component)
• Routine use of AI tools (using ChatGPT is not R&D)
• Marketing or commercial activities, even if AI-assisted
• Projects where the outcome is already well-established (no uncertainty = no R&D)
Key requirements:
• Your company must be tax-resident in Singapore
• The R&D must be carried out in Singapore (some overseas activities qualify with approval)
• Activities must involve systematic investigation or experimentation
• There must be technical uncertainty — if the outcome is obvious, it's not R&D
• You must maintain records demonstrating the R&D nature of the work
EIS + EDG stacking:
You can potentially claim both EIS tax deductions and EDG grant support for the same project, but only on different cost components. If EDG co-funds 50% of vendor costs, EIS can apply to the remaining 50% that you pay out of pocket, plus any qualifying internal R&D activities that EDG doesn't cover.
Practical advice: EIS is most valuable for companies that are already profitable and paying corporate tax. If your company is in a loss position, the tax deduction has no immediate value (though it can be carried forward). Startups and early-stage companies typically benefit more from EDG's direct cash co-funding.
How to Structure an AI Project for Grant Eligibility
The difference between a successful and unsuccessful grant application often comes down to how the project is structured and presented — not whether the project itself is worthy.
Five principles for structuring AI projects for EDG eligibility:
1. Define measurable business outcomes, not technical outputs
Wrong: "Implement an NLP model for document classification."
Right: "Reduce contract review turnaround from 4 hours to 45 minutes, enabling the firm to handle 40% more transactions without additional headcount."
Enterprise Singapore funds business outcomes, not technology experiments. Frame everything in terms of productivity gain, cost reduction, revenue enablement, or competitive advantage.
2. Show the baseline clearly
Document your current process in quantifiable terms before applying:
• Current time per task (hours)
• Current error/rework rate (percentage)
• Current cost per unit of output (dollars)
• Current capacity constraints (volume ceiling)
The grant assessment compares your projected AI-enabled state against this baseline. Without clear numbers, assessors can't validate your claims.
3. Use a qualified, independent vendor
EDG requires third-party delivery. You cannot claim for internal staff costs. Structure your project with a clear vendor engagement:
• Vendor provides the technical expertise and build services
• Your company provides domain knowledge, test data, and change management
• Deliverables and milestones are clearly defined in a contract
The vendor must be independent of your company (no common shareholders, no related parties).
4. Build in a pilot phase with measurable checkpoints
Structure your project in phases:
• Phase 1: Discovery and data preparation (Months 1–2)
• Phase 2: Build and internal testing (Months 3–5)
• Phase 3: Pilot deployment and measurement (Months 6–8)
• Phase 4: Full rollout and optimisation (Months 9–12)
This phased approach shows Enterprise Singapore that you've thought through risk and have checkpoints for course correction.
5. Include training and change management
Enterprise Singapore wants to see sustainable outcomes — not a shiny tool that nobody uses. Include:
• Staff training programme (hours, who, what)
• Change management plan (how you'll drive adoption)
• Post-project sustainment plan (how you'll maintain the system after the grant period)
These elements signal maturity and increase approval probability.
Common Mistakes That Get Applications Rejected
Having supported multiple EDG applications for AI projects, we've seen the same failure patterns repeatedly:
Mistake 1: Vague outcomes
"Improve efficiency" is not an outcome. "Reduce document processing time by 60%, from 4 hours to 96 minutes per contract" is an outcome. Assessors need numbers. If you can't quantify the benefit, your application will be returned for clarification or rejected.
Mistake 2: Starting work before approval
Any costs incurred before your Letter of Offer is issued are not claimable. This catches firms that engage a vendor "to get started" while the application is pending. Wait for the LOF. The timeline is frustrating but the rules are strict.
Mistake 3: Choosing the wrong grant
Applying to PSG for a custom AI build. Applying to EDG for a simple chatbot that's available off-the-shelf on the PSG list. Mismatching your project to the scheme wastes months. Custom builds = EDG. Pre-approved tools = PSG.
Mistake 4: Overly ambitious scope
A S$500,000, 18-month AI transformation programme covering five departments is harder to approve than a focused S$80,000, 6-month project targeting one use case. Start small, prove value, then apply for a second grant for expansion. Enterprise Singapore actually prefers this progressive approach.
Mistake 5: No vendor quotation or vague vendor scope
Your vendor's quotation must be detailed: specific deliverables, milestone payments, timeline, resource allocation. "AI system development — S$80,000" is insufficient. "Phase 1: Data preparation and model design — 120 hours @ S$250/hr — Deliverable: Validated training dataset and model architecture document" is what assessors want to see.
Mistake 6: Ignoring the sustainability question
"What happens after the grant period?" If your answer is "we'll need another grant to maintain it," the application will likely be rejected. Show that the system will be self-sustaining: internal staff trained to maintain it, reasonable ongoing costs that your business can absorb, and a clear plan for continuous improvement.
Mistake 7: No competitive analysis
Enterprise Singapore wants to know you've evaluated alternatives. Include a brief comparison of build-vs-buy options, explain why your chosen approach is optimal for your specific needs, and reference market benchmarks for the expected outcomes.
Realistic Timeline: Application to Disbursement
Here's the true timeline for an AI project funded through EDG, based on actual applications we've supported:
Pre-application preparation: 2–4 weeks
• Define project scope and outcomes
• Get vendor quotations (detailed, milestone-based)
• Prepare baseline measurements
• Draft the application narrative
• Gather supporting documents (business registration, financial statements, org chart)
Application submission and evaluation: 8–14 weeks
• Submit via Business Grants Portal
• Enterprise Singapore assigns a case officer (1–2 weeks)
• Initial review and clarification questions (2–4 weeks)
• Possible interview or site visit (for larger projects)
• Committee review and decision (4–6 weeks)
• Letter of Offer issued
Project execution: 6–12 months (varies by scope)
• Vendor engagement and kickoff
• Phase-by-phase delivery against milestones
• Interim claims for projects over 6 months (optional)
• Document outcomes and evidence throughout
Final claim and disbursement: 6–10 weeks
• Submit final claim with completion evidence
• Enterprise Singapore reviews (4–6 weeks)
• Disbursement to your account (2–4 weeks)
Total realistic timeline: 12–20 months from decision-to-apply to cash-in-account.
Tips to accelerate:
• Have your vendor quotation ready before you start the application — this is often the bottleneck
• Respond to Enterprise Singapore clarification questions within 48 hours (delays compound)
• Keep meticulous records during the project — missing evidence at claim stage causes weeks of delay
• Submit interim claims if eligible — this improves cash flow during the project
Cash flow consideration: You will fund the project out of pocket (or vendor credit) during execution and receive reimbursement after completion. For a S$80,000 project with 50% EDG, you'll spend S$80,000 and receive S$40,000 back 2–3 months after project completion. Budget for this cash flow gap.
For cost estimation to prepare your quotation, see our AI App Development Cost Guide.
Next Steps: Getting Your AI Project Funded
If you're planning an AI project for your Singapore business, grant funding can reduce your effective cost by 50–70%. But the application process requires preparation and the right project structure.
How we help:
We support Singapore SMEs through the full cycle:
• Project scoping — Define the right AI use case for grant eligibility and maximum business impact
• Vendor quotation — As your AI development partner, we provide detailed quotations in the format Enterprise Singapore requires
• Application support — Help you prepare the narrative, outcomes, and supporting documentation
• Project delivery — Build and deploy the AI solution against the approved milestones
• Claim documentation — Evidence collection and final claim preparation
Our track record: We've supported successful EDG applications for AI projects across legal, professional services, logistics, and retail sectors. Project sizes range from S$30,000 to S$250,000 in total cost.
Which grant is right for you?
• Building a custom AI tool for your specific workflows → EDG
• Buying a pre-approved AI product from the PSG list → PSG
• Conducting genuine AI R&D with technical uncertainty → EIS (tax deduction)
• Combining grants for maximum benefit → We'll help you structure the optimal combination
Book a free 30-minute call — we'll assess your project's grant eligibility and recommend the optimal funding path. No obligation, and we'll tell you honestly if a grant isn't the right approach for your timeline or project type.
Frequently asked questions
Which grant should I apply for if I want to build a custom AI tool?
EDG (Enterprise Development Grant) is the best fit for custom AI development projects. It covers consultancy, development, and implementation costs for projects that improve business processes. Co-funding is typically 50% for SMEs, up to 70% for qualifying sectors. PSG is only for pre-approved off-the-shelf solutions.
Does my company qualify for EDG funding for an AI project?
You likely qualify if: your company is registered and operating in Singapore, has at least 30% local shareholding, has at least 3 years of operating history (exceptions for high-growth firms), and your project addresses a genuine business need with measurable outcomes. Annual revenue should be below S$100 million for the SME support tier.
Can custom-built AI applications qualify for PSG?
No. PSG only covers pre-approved solutions listed on the GoBusiness portal. Custom builds are not eligible. However, if your vendor offers a pre-approved AI solution that meets your needs, PSG can cover up to 50% of the cost. For custom work, apply for EDG instead.
How long does the EDG application process take from start to finish?
Expect 3–4 months from application submission to approval. Add another 1–2 months for grant disbursement after project completion. The project itself runs during the approved timeline (typically 6–12 months). Total from application to cash-in-hand: 10–18 months. Start early.
Does OTG help with grant applications?
Yes. We help structure AI projects for grant eligibility, prepare the technical scope documentation, define measurable outcomes, and provide vendor quotations in the format Enterprise Singapore requires. We've supported successful EDG applications for AI projects ranging from S$30,000 to S$250,000 in total project cost.
What's the maximum grant amount I can receive for an AI project?
EDG has no fixed maximum — it's based on your project scope and the co-funding ratio (50–70%). In practice, most SME AI projects receive S$15,000–S$125,000 in grant support. PSG caps at S$30,000 per solution category. EIS provides tax deductions (not cash grants) on qualifying R&D expenditure.
PreviousAI Document Automation for Singapore Legal PracticeNext AI & PDPA Compliance: What Singapore Businesses Must Know
Want to Apply This to Your Business?
We're a Singapore AI development and automation agency. Let's discuss how we can help solve your specific challenges.