Guide To SME Loan In Singapore

Small and medium enterprises are among the most vulnerable sectors in Singapore, with most still facing repercussions due to the pandemic. Whether it’s dealing with temporary shutdowns, not having enough cash reserves, reduced work hours, or mass layoffs, the SME sector has gone through so many challenges.

In the same way, aspiring SME business owners also need to get past many hurdles to make their dream come to life.

What should entrepreneurs in Singapore do to start a business, keep an existing business afloat, or expand their reach and operations? The solution lies in the best SME loans for small businesses.

• Types of Business Loans in Singapore
  • Government-Assisted Business Loan Schemes
  • Business loans from banks
  • Business loans from Finance institutions
  • P2P Crowdfunding
  • Merchant Cash Advance
  • Invoice Financing
  • Business Overdraft
  • Business First Loan
  • Venture Debt Financing
• Frequently Asked Questions

Types Of Business Loans In Singapore

To help you find the SME loans that fit your situation best, here’s our SME Loan in Singapore guide.

In 2020, different government-assisted business loan schemes were introduced as a way for the government to keep supporting businesses that were affected by COVID-19. These loans are administered by Enterprise Singapore, as well as participating financial institutions.

This type of SME loan is extremely beneficial for entrepreneurs because it includes a government risk share of up to a staggering 90%. Enterprise Singapore offers 3 various credit facilities for SMEs.

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• Must be a business entity that is registered and physically present in Singapore
• Must have at least 30% local equity held directly or indirectly by Singaporean(s) and/or Singapore PR(s), determined by the ultimate individual ownership
• Must have Group Annual Sales Turnover of not more than S$500 million

*For “SME Working Capital”, the definition refers to businesses with a group revenue of up to S$100 million or maximum employment of 200 employees For more information, visit this page.

• Must be a business entity that is registered and physically present in Singapore, and
• Must have at least 30% local equity held directly or indirectly by Singaporean(s) and/or Singapore PR(s), determined by the ultimate individual ownership, and
• Must have a Group Annual Sales Turnover of not more than S$500 million

For more information, visit this page.

• Must be a business entity that is registered and physically present in Singapore
• Must have at least 30% local equity held directly or indirectly by Singaporean(s) and/or Singapore PR(s), determined by the ultimate individual ownership

All major banks in the country offer this type of SME loan to local businesses, but entrepreneurs may be asked to present certain requirements to prove the legitimacy of their business.

But how is a business loan different from a personal loan? Take a look at the table below.

Personal loans are a great choice for people who are just starting their business. Despite the smaller loan amount (usually only 6x your salary), it is easier to acquire.

Want to know the best business loans offered by banks in Singapore? Take a look at this table below.

Many financial institutions also offer lending options to SMEs. These business loans are unsecured similar to banks. The only difference is that loans from financial institutions usually focus more on equipment loans, factoring, and other asset-based lending options.

Fastest Online SME Loans

Need an instant loan for your business today? You may consider applying from Capitall Pte Ltd. If your application meets all eligibility and credit risk criteria, your application approval can only take hours.

Also, when all the documents required and all information are submitted properly, you can receive your loan within 24 hours of application.

Apply for an SME loan in Singapore. Also, they provide auto financing.

Take a look at some of the best business loans offered by financial institutions below.

• Sing Investments & Finance Limited Commercial Property Loan
• Sing Investments & Finance Limited Accounts Receivables/Invoice Factoring Loan
• Sing Investments & Finance Limited COVID-19 Financial Assistance
• Singapura Finance Commercial & Industrial Property Financing 
• Singapura Finance Business Loan
• Bugis Credit Business Loan

Whether your business has been operating for a few years and you need funds for expansion, or you simply need capital to start your dream business, you can take advantage of crowdfunding.

For lending-based crowdfunding, individuals lend you money and you commit to repay the loan at a predetermined interest rate and period.

Here are some of the best crowdfunding platforms you can take advantage of in Singapore.

This is a type of financing option that F&B businesses that use credit card terminals can take advantage of. The major criteria for this kind of credit facility include the SME’s credit card transactions for the past 6 months. Other factors include profitability, financials, and guarantors.

When it comes to this type of loan, the advance amount is calculated by averaging the monthly credit card transaction over the last 6 months. Then, it is multiplied 1.5-4 times. The repayment period for this type of loan is usually 6-9 months.

Here are some merchant cash advance providers in Singapore.

Discover more about merchant cash advance.

For this type of loan, invoices are used as collateral. To qualify for this loan, the customers of a business must show financial strength.

When it comes to SMEs, they usually issue invoices after completing a sale. SMEs use invoices as collateral while they await payment for the sale. Once approved, they can collect up to 80% of the invoice value for each invoice until they reach their credit limit.

To get approved for invoice financing, the borrower must provide a clean track record of their past transaction history and service performance. Businesses whose customers are multinational corporations or the government are preferred compared to usual SME customers.

Here are some invoice financing providers in Singapore.

This loan is usually used as an alternative to business term loans. It is recommended for businesses who need short-term working capital. Despite being used for the same purpose as an unsecured business loan, an OD facility provides SMEs with a line of credit instead of the lump sum amount they need. Considering this, the interest is only charged for the amount used up by the SME.

To be eligible for this loan, an SME’s financial performance and bank statement records need to be evaluated. The personal credit records of the guarantors will also be considered.

These two banks provide business overdraft in Singapore.

This type of unsecured loan is geared towards startups that have been operating in the country for 6 months to 2 years.

Just like other unsecured loans, this loan doesn’t put heavy emphasis on financial history and performance because the business has only been operating for a limited time. The major factor in the evaluation process is the company’s directors or guarantor’s personal credit scores, as well as their declared incomes.

Take a look at this table to learn more about OCBC’s Business First Loan.

Banks are unable to grant debt financing to unprofitable companies but recently, many startups have obtained multi-million venture investments while still not churning profits. Venture debt financing facilities were created to address these gaps.

To be granted this financing option, the financial institution will evaluate a company based on its equity obtained from venture investors, as well as its business model. There is less emphasis on the financial performance and history since startups are not profitable.

Take a look at this table below to learn about DBS and OCBC Venture Debt Financing.

Here are some commonly asked questions about SME loans.

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