Up to $100,000
4 Year Repayment Period
From 3.2% - 3.75% p.a
What is the SME Micro Loan?
The SME Micro Loan by Enterprise Singapore is basically a long term, low interest business loan that was initiated for the purpose of giving businesses a helping hand with cash flow. Enterprise Singapore is a government related arm that provides various grants and programs to spur the growth and development of small businesses in Singapore. While Enterprise Singapore does not actually lend out any money, they bear 50% of the lender’s exposure in the event of a default.
The SME Micro Loan scheme, which is a small business loan program in Singapore, is targeted at businesses that are relatively younger and smaller. If conditions are met, an SME may take up to $100,000, which is payable over a 4 year tenure.
For businesses that have been in operations for less than 3 years, Enterprise Singapore stands in as a guarantor for up to 50% of the credit risk. This would open up the micro loan to emerging businesses that are usually seen to have high default risk. Emerging businesses make up 90% of all local enterprises.
To qualify, businesses must be registered and operating in Singapore. They must have a minimum of 30% local shareholding. Annual sales should be less than S$1 million or employed less than 10 workers. Group annual sales must be less than S$100 million or group employment size must not be more than 200.
How to get a Micro Loan?
One of the safeguards of the SME Micro Loan is that the applicant entity has to be at least 6 months old, and in active operations. If you happen to be starting up a business, or are in urgent need of funds to commence on a project, it is likely that the thought of obtaining the funds is still the only thing that you can focus on.
While there may be many other alternative sources of funding, the SME Micro Loan is still the most sought after. It was structured to be a helping hand to SMEs that were going through a dry season, and therefore, was specifically tailored to be generous, long term, and very affordable.
The SME Micro Loan is the most popular and cost effective financing for small businesses. This should also mean that the number of applications for the Enterprise Singapore SME loans must be overwhelming, which could make the application process a little longer.
Either ways, before jumping into a loan commitment, ensure that you have already seen and understood all the other available products, so as to choose the right product for your business.
How to qualify for the SME Micro Loan?
While the conditions and requirements to qualify for the SME Micro Loan varies from bank to bank, there are a few general requirements that are consistent.
The banks determine if a business is eligible depending on the yearly revenues, cash flow strength, and the age of the company.
From time to time, the banks have a list of industries that they avoid lending to, but this list varies from season to season, and from bank to bank. As long as your business does not fall into any of the industries on the list, then your company is eligible to apply for the SME Micro Loan, albeit still subject to the credit approval of the banks.
The lending institutions and banks that are tied up with Enterprise Singapore, typically consider applicant companies to be qualified for the loans if they have been in operations for at least 6 months, pulled in a revenue of at least $300,000 over the last year, have strong cash flows, and are profitable. It also helps significantly if the directors of the business have a healthy credit history.