Small Business Loans in Singapore

Every small business in Singapore understands the importance of consistent cash flow and strategic growth. But navigating the financial landscape can be challenging. That's where small business loans step in, offering the vital support needed to manage day-to-day operations, expand, and overcome unexpected hurdles.

Besides, access to timely financing isn't just about numbers—it's about empowering your business to seize opportunities and build a solid foundation. In Singapore’s competitive market, having the right financial resources at your fingertips can make all the difference in sustaining and growing your business.

At LoanOwl, we understand these concerns, and we’re here to make the loan process easier. Let us connect you with trusted lenders and help you secure the corporate loan you need to drive your business forward.

Types of Small Business Loans

Unsecured Business Term Loan

Unsecured business term loans provide financing for your small business with no collateral required. The loan sizes can range from S$100,000 to S$700,000 per bank, with instalments ranging from one to five years. Yearly top-ups for existing loans are also available.

SME Micro Loan

An initiative by the Singapore government to boost productivity for SMEs in Singapore, this micro loan gives you up to S$100,000 in financing with fixed monthly instalments.

SME Working Capital Loan

An SME working capital loan is a financing initiative by the Singapore government providing up to S$300,000 in financing for Singapore firms. SMEs have the option to repay the SME working capital loan at any period with no penalty and a pro-rated interest.

Unsecured Business Term Loan

Trade financing allows businesses and SMEs to purchase materials from their suppliers based on credit. With a letter of credit, they will be able to purchase up to their trade financing limit, paying a percentage of loan interest to the bank.

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Receivables Financing / Invoice Financing

Invoice financing is a type of loan that allows your small business to get up to 80% of your invoiced amount paid earlier. After successfully completing a sale, submitting the invoice to the financier gets you the invoiced amount instantly instead of waiting for the credit period.

Property Loan

SMEs can pledge their property held by the company for working capital to expand their business. A form of secured lending, the interest rates for this method of financing are significantly cheaper for property loans.

Equipment Financing

Equipment Financing allows SMEs to purchase important items critical for their business on hire purchase or leasing. With this loan option, they can unlock their cash flow to keep the business expanding while having the necessary equipment financing.

Eligibility for a Small Business Loan

To qualify for an SME loan in Singapore, several factors come into play. For instance, lenders typically require businesses to be registered entities, demonstrating a formal operational structure. Generally, a minimum of one year of business operation is expected, showcasing financial stability.

Credit history is also a crucial consideration. And while revenue requirements vary, a solid financial track record is essential. While specific size requirements can differ between lenders, most focus on SMEs with demonstrable growth potential. Also, loan amounts generally range from S$100,000 to S$500,000, determined by the lender’s credit assessment.

Documents Required for Small Business Loans

To streamline your SME loan application in Singapore, ensure you have the following documents readily available:

• Business Registration and Licence: Official documentation confirming your business's legal status.
• Financial Statements: Comprehensive records, including balance sheets and income statements, showcasing your company's financial health.
• Proof of Revenue and Tax Filings: Documentation verifying your business's income and compliance with tax regulations.
• Identification Documents for Business Owners: NRIC or passports of all directors and key personnel.
• Bank statements: Recent statements demonstrating your company's transaction history and cash flow.
• Loan Application Forms: Completed forms provided by the specific lender you are applying with.

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How to Apply for an SME Loan

Expanding your business in Singapore often requires strategic financial support. LoanOwl simplifies the process of securing SME loans, ensuring you get the capital you need efficiently. Here’s how it works:

1. Initial Assessment

Begin by submitting your inquiry. We will then conduct a thorough assessment to understand your business needs, including financing requirements (unsecured business term loans, property refinancing, etc.) and eligibility criteria (incorporation length, property value, etc.).

2. Overcoming Loan Rejections

If your small business faced prior loan rejections from banks, LoanOwl can provide you with a streamlined pathway. Leveraging our expertise, we will work to secure your loan approval quickly and efficiently, minimising delays and complications.

3. Documentation and Submission

Once we confirm your eligibility for an SME loan, we will guide you through the document collection process. We then compile and submit your application to suitable lenders within our network, ensuring a smooth and efficient submission.

4. Successful Financing

Upon lender approval and successful financing for your small business, we will finalise the loan process. Our fee structure involves a success fee or, in some cases, a referral fee from the lender, depending on the type of financing secured.

If you have inquiries or concerns regarding business loans, don't hesitate to contact the specialists here at LoanOwl today!

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Interest Rates on SME Loans in Singapore

It's been said that 9 out of 10 small businesses fail in the first year. One of the most common reasons for a company to flop is due to being undercapitalised. One way to overcome this problem is by taking a loan. However, this also exposes the entrepreneur to abuses from loan sharks.

Thankfully, Singapore is a progressive country that embraces entrepreneurship and does everything it can to stimulate business growth. This is the reason why Singapore has strict rules that govern SME loans, also known as small and medium enterprise loans.

In most cases, Singapore laws are set in place to prevent the practice of loan sharking. This way, upcoming businesses are protected from abuses and have increased chances of success.

Current Interest Rates on SME Loans in Singapore

Keep in mind that interest rates for SME loans in Singapore are typically moving. The figures below only constitute the rates at the time of writing this article.

Another thing to consider is where you’re getting your loan. As a rule of thumb, the interest rate on unsecured loans is generally higher when compared to secure loans. Also, the size of the bank matters. Bigger banks will often give you lower interest rates, but it may be more difficult to get approved.

• SME Micro Loan 6.75% to 8.5% per annum
• Unsecured Business Term Loan 7.5% to 11% per annum
• Trade Financing Line 6.5% to 8% per annum
• SME Working Capital Loan 7.5% to 8.8% per annum
• Overdraft 9% to 12% per annum
• Factoring / Receivables Invoice financing 7% to 12% per annum
• Commercial/Industrial Property Loan 2.8% to 4% per annum
• Equipment/Machinery Loan 4% to 7% per annum
• Alternative Financing or P2P Crowdfunding 1% to 5% per month

Keep in mind that the interest rate figures above are in EIR, also known as Effective Interest Rate.

Conclusion

The subject of SME loans is a very choppy sea to navigate in Singapore. It’s best that you work with a professional to help you get the loan you want or need for your business at the rate and terms that are beneficial for both parties. Whether you need a temporary bridging loan or a financing solution for your small business, LoanOwl is there to help you. We have loan specialists who are experts in Singapore lending laws and are always updated to help you find the best rates.

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Our business loan consultants will call you within one working day and will compare the rates from the different banks at no obligation.

Did you know that LoanOwl saves you time by handling your entire business loan application from start to end?

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Why Choose Us

• Time-Saving Loan Process
• Access to Multiple Lenders
• Tailored Loan Options for Your Small Business
• No Hidden Fees or Charges

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