SME Micro Loan Singapore in 2019
What is SME Micro Loan?
The SME Micro Loan by Enterprise Singapore is a long term, low interest small business loan that was launched to help small and medium sized enterprises get greater access to SME loans in Singapore.
Enterprise Singapore is a government related agency that provides grants and SME financing schemes to small medium enterprises (SMEs) in an effort to spur growth and development amongst small businesses in Singapore. While Enterprise Singapore does not lend out any money, they serve to bear 50% of all loan default risks.
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.
Here are the features of the SME Micro Loan:
- Loan Amount: Up to S$100,000
- Repayment Period: 1 to 5 years
- Interest Rate: 3.2 – 4.5% p.a.
To qualify for the SME Micro Loan, your company should meeting the following criteria:
- Registered and operating in Singapore for at least 6 months.
- At least 30% local shareholding.
- Company turnover at least S$300,000; and no more than S$100 million.
- Total employment size not exceeding 200.
Required Documents for Application
At last, just a few documents that you will need to prepare:
- NRIC or passport copy of company directors
- Income tax Notice of Assessment of directors for the last 2 years
- Company financial statements for the last 2 years
- Bank statements for the last 6 months
FAQ on SME 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 a project or purchase an equipment, 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, this small SME 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.
While the conditions and requirements to qualify for the small business loan varies from bank to bank, there are a few general guidelines to follow.
Typically, banks determine if a business is eligible based on a few criteria — revenue, cash flow, age of company, existing credit exposure.
- Revenue – Turnover of company to be at least S$200,000 and above.
- Cash flow – Daily average balance of at least S$10,000 maintained in corporate bank account over last 4 – 6 months.
- Age of company – Registered and operating for at least 6 months
- Existing credit exposure – Amount of outstanding business loans
Most banks maintain a list of industries that they avoid lending to, which is subject to change, depending on the economic outlook of the particular industry. As long as your business does not fall into any of the industries on the list, your company is eligible to apply for the loan, albeit still subject to the credit approval of the banks.
Generally, most financial institutions and banks consider applicant companies to be qualified for the SME loan if they have been operating for at least 6 months, have a revenue of at least S$300,000, maintain strong cash flow, and do not have too many existing business loans. It also helps significantly if the director of the business has a healthy credit history.
About Capable Loans
Capable Loans (by Capable Group) is a Corporate Financing Consultancy with a specialized expertise in the syndication and structuring of debt financing and SME Business Loans in Singapore.
Our team of professionals boasts a wealth of experience in the finance industry. With a 98% approval rate, we have helped many companies to secure the financing they need to grow their business.