BUSINESS LOANS

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Types of Business Loans

SME Working Capital Loan Singapore

SME Working Capital Loan

The SME Working Capital Loan is a financing initiative by Enterprise Singapore to help companies gain greater access to unsecured SME loans.

Maximum Loan Amount

$50,000 – $300,000

Term

1 – 5 years

Interest rates

3.2 – 4.5% per annum

Speed

2 weeks

SME Loan Singapore

SME Micro Loan

The purpose of the SME Micro Loan is to encourage easier access to small business loans in Singapore.

Maximum Loan Amount

$50,000 – $100,000

Term

1 – 5 years

Interest rates

3.2 – 4.5% per annum

Speed

2 weeks

start up business loan Singapore

Start Up Business Loan

The Start Up Business Loan is mainly for medical doctors and dental surgeons who want to set up a new private practice.

Maximum Loan Amount

$50,000 – $500,000

Term

1 – 5 years

Interest rates

4.98 – 6.88% per annum

Speed

2 weeks

sme loan consultant

Crowdfunding

Crowdfunding is a good alternative to traditional bank loans that allow you to raise capital via a pool of individuals.

Maximum Loan Amount

Up to $5 million

Term

12 – 24 months

Interest rates

12 – 16% per annum

Speed

3 weeks

equipment financing Singapore

Equipment Financing

Equipment financing allows you to receive funds to purchase equipment upfront. You then repay the amount via monthly installments over a period of time.

Maximum Loan Amount

Up to 100% of equipment value

Term

1 – 5 years

Interest rates

1.8 – 2.5% per annum

Speed

2 weeks

equity funding Singapore

Equity Financing

Equity financing enables you to raise capital by selling shares in your business. The financier gains ownership interest in exchange for an injection of capital into your business.

Maximum Loan Amount

Unlimited

Term

Unlimited

Interest rates

N.A

Speed

1 – 3 months

sme financing

Marine Offshore Engineering Loan

The Marine Offshore Engineering loan is a bridging loan aimed at assisting companies in the industry with working capital to ease cash flow problems.

Maximum Loan Amount

Up to $15 million

Term

1 – 5 years

Interest rates

6.75 – 8.25% per annum

Speed

3 weeks

bank loan Singapore

Personal Loan for Business

Personal loans can be a great alternative to SME loans, especially for new business owners who do not yet have strong corporate financial records.

Maximum Loan Amount

Up to $1 million

Term

1 – 5 years

Interest rates

4.98 – 6.88% per annum

Speed

1 week

Apply for the Best SME Loans

How Do You Qualify For a Business Loan?

With so many business loans in the market, where do you get started?

Which is the best bank loan for your business?

Here are 7 steps to help you qualify:

  1. Maintain a healthy balance in your company bank account
  2. Hit a yearly turnover of S$150,000 and above
  3. Increase your company’s net profit from the previous year
  4. Reduce outstanding corporate and personal loan exposure
  5. Build a good personal credit rating
  6. Provide collateral
  7. Include an additional guarantor for the loan

Why Do You Need an SME Loan?

Before getting a small business loan for your business, you should assess the financial situation of your business to determine if you really need the additional funds. Do you need a long-term loan or a short-term loan?

With a myriad of business financing options available, you should consider carefully in order to obtain the best SME loan in Singapore.

Getting the wrong type or SME business loan can have very adverse effects on the finances of your business. For instance, if you chose a short-term loan for a long-term project, it can cause your business to run into unnecessary cash flow problems. It is important that you consider the objectives for getting a business bank loan, and to match the time-span of the project with the term of the loan.

How Much Should You Borrow?

Once you have come to a decision on the tenure of the loan, then comes the part where you decide on a monthly installment amount that you are confident of repaying.

Based on the desired business loan interest rate and quantum, divide the total sum by the number of months in the tenure to see if it is a sum that your business cash flow can comfortably sustain.

Understanding the monthly commitments that your business has taken on is a good step to take in working out the financial position of your company. Having a clear goal of how much funding you require will help in the process of obtaining the funds you need.

Does Your Business Have Enough
Cash Flow For Monthly Repayments?

Lenders like to lend money to businesses that have money to pay them back. To assess a business’s ability to pay back an SME business loan Singapore, lenders rely on various factors that articulate the financial strength of a business, such as the debt to equity ratio, financial statements that show revenues and expenses, and cash flow projections.

To ensure that you are sufficiently equipped, it would be wise to tabulate the total loan amount required and the interest rates, in order to know whether the business can sustain the monthly repayments comfortably.

What Are The Required Documents To Apply?

Required documents for assessments may vary from lender to lender. However, these are the few general documents that every financier will almost certainly need to process an application:

  • Past bank account statements
  • Profit and Loss statements
  • Balance sheets
  • Income tax returns of Directors
  • Identification proof of Directors
  • Information on existing debt facilities

We all know that paperwork can cause delays. Therefore, even though all the relevant documents will be requested for during the application, it would help to speed up the process significantly if all the proper documents were already ready.

An important part of the application process is to convince the lender that your business is ready to take on the loan, and that your business is also strong enough to repay it. Having all the relevant documents prepared will help to portray this. More often than not, there will also often be requests for additional documentation. As far as possible, always try to be prompt in providing them.

It is also important to note that for a company to be eligible for an SME loan in Singapore, there is a requirement for the company to have at least 30% local shareholding. Most banks will request for the Director or a shareholder in the company to provide personal guarantee for the term loan, where the guarantor must be either a Singapore citizen or Singapore PR.

How Long Does an Application Take to Process?

The usual loan application takes about 2 – 3 weeks to get processed to the point of disbursement. However, with more complex cases, the processing time could take up to 1 month.

If you happen to need financing urgently, you could always engage a loan broker. Loan brokers are often able to get applications processed faster, due to the fact that they are familiar with the bankers, requirements and documentation.

Business Loan Interest Rate

Business financing loan products vary from bank to bank. Each bank will have different interest rates, which can change from time to time. The interest rate of the typical business term loan usually ranges from 3.5% to 6.5% per annum.

Other Types of Business Financing Products:

Trade financing refers to the financing of commerce and international trade activities. Trade finance generally involves a revolving credit line that is used to finance the purchase of stocks, material and inventory.

It includes the issuing of Letters of Credit (LC), Invoice Factoring, Export Credit, lending and Trade Credit Insurance.

Invoice financing refers to the financing of invoices that are payable on credit terms. It is mainly used for the purpose of tiding over short periods of tight cash flow, usually between 30 – 120 days.

Essentially, it is a process where a financier ‘takes over’ an invoice from the company that issued it, and advances to the company an amount of up to 80% – 90% of the invoice value. This will allow the company to have access to short term capital.

When the tenure of the invoice has reached its dateline after 30 – 120 days, the debtor makes payment to either the financier or the company that issued the invoice.

Property financing refers to a wide range of financing activities that involve the use of a private or commercial property, from mortgage loans to property refinancing, or even to partial cash-outs on the value of a property.

For SME loans, SME owners can also choose to secure it by pledging a property to the banks or financial institution as collateral, which also allows for lower interest rates.