If you run a Singapore SME and you have been putting off AI because of the cost, here is the number that changes the maths: the Productivity Solutions Grant (PSG) covers up to 50% of qualifying AI adoption costs, capped at S$30,000 per company per financial year. A S$20,000 AI customer service tool effectively costs you S$10,000. The catch most people miss: PSG only funds pre-approved, off-the-shelf solutions — and the moment you need something custom, you are looking at a different grant entirely. This guide explains both, accurately, so you apply for the right one the first time.
PSG is administered by Enterprise Singapore and forms part of the IMDA SMEs Go Digital programme. It was designed to make proven productivity tools affordable for smaller companies, and in the last two years it has expanded to cover AI-enabled solutions directly.
How Much the PSG Grant Actually Covers
Here are the figures that matter, as they stand for 2026:
- Support level: up to 50% of qualifying costs (the solution cost, plus eligible setup and subscription components).
- Grant cap: S$30,000 per company per financial year, across all PSG claims.
- Reimbursement, not upfront funding. You pay the vendor first, deploy the solution, then claim the 50% back. Budget for the full amount initially.
- Approval before purchase. You must apply and be approved before you commit to or pay for the solution. Buy first and you forfeit the grant.
The S$30,000 cap is the part that quietly shapes your strategy. It comfortably covers most off-the-shelf AI subscriptions and small deployments. It does not cover a six-figure custom AI build — which is exactly where EDG comes in, covered further down.
What AI Solutions Qualify for PSG
PSG funds solutions that sit on the pre-approved list under SMEs Go Digital. You do not get to nominate any tool you like — it has to be a vendor and solution that IMDA and Enterprise Singapore have already vetted. The good news is that the approved list has expanded to include AI-enabled categories. The two most relevant for AI automation are:
1. AI Customer Service
Pre-approved AI customer service solutions include AI chatbots and virtual assistants that handle customer enquiries, automate first-line support, qualify leads, and answer FAQs across web, WhatsApp, and social channels. For a retail, services, or F&B business fielding the same questions hundreds of times a week, this is often the fastest payback AI purchase available — and PSG halves the cost.
2. AI Commerce
AI commerce solutions cover tools that use AI to drive online sales — product recommendation engines, automated merchandising, AI-assisted content and listings, and conversion optimisation for e-commerce stores. If you sell online, these tools are on the approved list and PSG-eligible.
Beyond the AI-specific categories, PSG continues to fund a wide range of digital solutions — accounting software, inventory and POS systems, HR and payroll, booking and scheduling tools — many of which now have AI features built in. The rule is simple: if it is on the pre-approved vendor list, PSG can fund up to 50% of it.
Who Is Eligible for PSG
The eligibility criteria are deliberately broad so that most genuine Singapore SMEs qualify. To be eligible your company must:
- Be registered and operating in Singapore.
- Have at least 30% local shareholding.
- Have group annual sales of S$100 million or below, OR a group employment size of fewer than 200 employees.
- Use the purchased, leased, or subscribed solution in Singapore.
One condition trips people up: you must be in a healthy financial position to make the purchase, because PSG reimburses you after deployment. The grant improves your ROI; it does not finance the upfront outlay.
PSG vs EDG: The Distinction That Decides Everything
This is the single most important thing to understand before you apply, and it is where most businesses pick the wrong path. Singapore has two main grants relevant to AI, and they fund fundamentally different things:
- PSG — for pre-approved, off-the-shelf AI. Up to 50%, capped at S$30,000/year, fast to approve. Use it when a ready-made tool from the approved list solves your problem — an AI chatbot, an e-commerce AI tool, AI features inside accounting or booking software.
- EDG (Enterprise Development Grant) — for custom AI. Up to 50% of eligible costs with no fixed cap, but a more detailed application and approval process. Use it when you are building a bespoke AI system tailored to your operations — an AI quoting engine, a document-processing pipeline, a custom internal knowledge agent.
The deciding question is straightforward: does a pre-approved tool already do what you need? If yes, PSG is faster and simpler. If your process is specific enough that no off-the-shelf product fits — which is the case for most quoting, dispatch, claims, and document-heavy workflows — then PSG cannot fund it, and EDG is the route. You cannot claim both grants for the same cost item, but you can use PSG for ready-made tools and EDG for a custom project as long as there is no overlap.
How to Apply for PSG, Step by Step
The application runs through the Business Grants Portal (BGP). Here is the sequence:
1. Identify the problem and the solution. Decide what you want to automate, then browse the pre-approved solutions on the GoBusiness / SMEs Go Digital list to find a matching tool and vendor.
2. Get a quotation. Contact the approved vendor for a formal quote covering the solution and any eligible setup or subscription costs.
3. Submit the PSG application on BGP. Log in with your Corppass, select the solution, attach the quotation, and submit — before you pay for anything.
4. Wait for approval. Approval typically takes a few weeks. Do not purchase or sign until you have it.
5. Deploy and pay. Implement the solution and pay the vendor in full.
6. Submit your claim. Upload proof of payment and deployment on BGP. Once verified, Enterprise Singapore disburses your reimbursement of up to 50%.
Grant rules, support levels, and eligible solutions are reviewed periodically. Always confirm the current figures on the official Enterprise Singapore and Business Grants Portal pages before you apply — this guide reflects the position in 2026, but the specifics can change at Budget time.
A Realistic Example
Say you run a 25-person services business and you are drowning in repetitive customer enquiries. You choose a pre-approved AI customer service tool at S$18,000 for the first year (setup plus subscription). With PSG at 50%, your effective cost is S$9,000. If that tool deflects even 40% of your incoming enquiries and frees up one staff member's time, the payback is measured in months — and you have only used S$9,000 of your S$30,000 annual cap.
Now say the same business needs an AI system that reads incoming supplier contracts, extracts key terms, and flags risks — something no off-the-shelf tool does for your exact paperwork. That is a custom build, PSG will not fund it, and you would scope it as an EDG project instead. Same company, two different grants, two different problems. Getting that split right is the difference between a funded project and a rejected application.
Frequently Asked Questions
How much does the PSG grant cover for AI in Singapore?
PSG covers up to 50% of qualifying costs for pre-approved AI solutions, capped at S$30,000 per company per financial year. It is paid as a reimbursement after you deploy and pay for the solution — not as upfront funding. It is administered by Enterprise Singapore and applied for through the Business Grants Portal.
What AI solutions qualify for the PSG grant?
PSG funds pre-approved, off-the-shelf solutions listed under the IMDA SMEs Go Digital programme. The expanded PSG includes AI categories such as AI Commerce and AI Customer Service — for example AI chatbots, automated support, and AI-driven e-commerce tools from approved vendors. Custom-built AI systems are not on the list and are funded through EDG instead.
Who is eligible for the PSG grant?
Your company must be registered and operating in Singapore, have at least 30% local shareholding, and have either group annual sales of S$100 million or below or fewer than 200 employees. The solution must be used in Singapore, and you must be approved before you pay for it.
What is the difference between PSG and EDG for AI?
PSG funds pre-approved, off-the-shelf AI tools (up to 50%, capped at S$30,000/year) and is fast to approve. EDG funds custom AI development and transformation projects (up to 50% of eligible costs, no fixed cap) with a more detailed application. Use PSG for ready-made tools; use EDG when building a bespoke system. You cannot claim both for the same cost.
How do I apply for the PSG grant?
Apply through the Business Grants Portal using Corppass. Pick a pre-approved solution and vendor, get a quotation, and submit the application before purchasing. After approval, deploy and pay, then submit a claim with proof of payment to receive your reimbursement. Approval usually takes a few weeks.
Use the Grant on the Right Thing
The grants are generous, but they reward businesses that pick the correct tool for the correct problem. Spend your PSG cap on a pre-approved AI tool that genuinely removes work, and you get a fast, simple 50% discount. Try to force a custom problem into an off-the-shelf box, and you waste the application — and the budget.
Book a free strategy call with 41 Labs. We will look at the process costing you the most time, tell you honestly whether an off-the-shelf PSG-eligible tool solves it or whether you need a custom EDG-funded system, and map the highest-ROI path either way. No jargon, no pressure — just a clear answer on what to build and how to fund it.