What is a Corporate Loan?

A corporate loan is a financing solution designed specifically for businesses, including corporations, partnerships, and limited companies, to support their operations and growth. Businesses can use corporate loans for various purposes, such as business expansion, capital expenditure, working capital or debt consolidation.

These loans are typically categorised as either secured (backed by collateral) or unsecured (based on the company's creditworthiness). Choosing the right loan type depends on your financial needs and repayment capabilities.

Types of Corporate Loans in Singapore

Businesses in Singapore have access to various corporate loan options, each designed to meet specific financial requirements:

1. Term Loans

A term loan provides your businesses with a fixed loan amount that is repaid over a predetermined period. This can be beneficial if you are seeking stable, long-term financing. Additionally, it is commonly used for business expansion, equipment purchases, or major projects.

2. Revolving Credit Facility

A revolving credit facility offers your business a flexible credit line, allowing them to borrow, repay, and borrow again as needed. This option is particularly useful for managing short-term cash flow fluctuations.

3. Trade Financing

Trade financing is designed for businesses engaged in international trade. It helps cover import and export transactions, reducing financial strain while waiting for payments from buyers.

4. Working Capital Loans

A working capital loan is a type of short-term financing solution that helps manage essential operational expenses such as payroll, inventory purchases, and rent payments. It ensures smooth day-to-day business operations without cash flow disruptions.

5. Invoice Financing

Invoice financing allows your business to borrow against unpaid invoices, providing immediate cash flow while waiting for customers to settle their payments. It can be a great option if you're dealing with delayed receivables.

6. Equipment Financing

An equipment finance loan allows businesses to acquire essential machinery, tools, or technology without a significant upfront investment. This type of loan helps maintain cash flow while ensuring your business still has the necessary equipment to operate efficiently.

Eligibility for a Corporate Loan in Singapore

When applying for a corporate loan, your businesses should meet specific criteria set by banks and financial institutions. These requirements include:

• Local Ownership and Shareholding: Certain financial institutions require a minimum percentage of local ownership to qualify for a loan. In compliance with Ministry of Law regulations, companies must have at least 30% ownership by Singapore Citizens or Permanent Residents (PRs) to be eligible for government-backed financing.
• Business Registration and Presence in Singapore: To apply for a corporate loan, your company should be legally registered in Singapore and actively operating within the country. Many lenders require businesses to have a physical presence in Singapore to qualify for financing.
• Annual Revenue and Income Criteria: The required annual revenue for corporate loans varies across financial institutions. Some private lenders accept businesses with a minimum annual sales turnover of S$500,000, while government-backed loans typically set an upper limit of S$100 million to remain eligible.
• Employee Count: Different loan providers have varying requirements regarding business size. Some banks cater to companies with 200 or fewer employees, while other lenders may not impose specific staffing limits.
• Minimum Operational Period: Most lenders require a minimum operating period of at least six months before applying for a loan. This ensures the company has a proven track record of business activity and financial stability.

Interested to know what type of loan your business may be eligible for? Feel free to get in touch with us.

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Documents Required for a Corporate Loan in Singapore

When applying for a corporate loan, businesses typically need to provide the following documents:

• ACRA Business Profile: Lenders require a copy of your Accounting and Corporate Regulatory Authority (ACRA) business profile to verify company details, including directors, shareholders, and paid-up capital.
• Personal Notice of Assessment (NOA): All company directors are required to submit their personal Notice of Assessment (NOA) from the last two years. This allows lenders to evaluate their declared income, which plays a role in determining loan eligibility and repayment capacity.
• Credit Bureau Singapore (CBS) Report: Each director should provide a Credit Bureau Singapore (CBS) report, which outlines existing loans, repayment history, and outstanding debts.
• Company Financial Statements: Lenders may require your company's Balance Sheets and Profit & Loss Statements for the past two years to assess financial performance. These records can be obtained from auditors or accounting software.
• Latest Six Months of Bank Statements: Your business should submit bank statements from the last six months to demonstrate cash flow and financial stability.
• Accounts Receivables Aging List (Optional): For businesses applying for invoice financing, submitting an Accounts Receivables Aging List can be beneficial. This document details outstanding invoices, overdue payments, and client information, helping lenders evaluate loan suitability.

How to Apply for a Corporate Loan in Singapore

Partnering with a corporate loan broker like LoanOwl can simplify the new business loan application process. This is what you can expect:

1. Initial Assessment

Our professionals will thoroughly assess your business needs and financial standing to identify the most suitable loan options. The evaluation typically includes:

• Determining the ideal loan type (e.g., unsecured loans, working capital financing, or property refinancing).
• Reviewing key eligibility criteria such as business tenure, financial stability, and existing liabilities.

2. Addressing Loan Challenges

If your loan applications have been declined by banks, our LoanOwl platform connects you with alternative lenders. Leveraging our expertise and network, we help you overcome financial hurdles and improve your chances of approval.

3. Documentation & Submission

Once we confirm your eligibility, we assist in compiling, organising, and submitting all required documents. Our structured approach minimises errors and speeds up processing for a hassle-free experience.

4. Loan Approval & Disbursement

After approval, the funds are released promptly. Our service is transparent, and we earn a success or referral fee from lenders—ensuring that securing financing remains our top priority.

Interest Rates on Corporate Loans in Singapore

The factors that impact your corporate loan interest rates include:

1. Loan Amount & Tenure

The size of the loan and the repayment period directly impact interest rates. Larger loan amounts usually come with lower interest rates, as they represent long-term commitments that are less risky for banks. Additionally, extending the loan tenure can lower monthly repayments, but some lenders may charge higher interest rates to compensate for the increased risk of default over time.

2. Business Creditworthiness

Lenders assess a company's financial health before determining loan terms. Businesses with strong financial records, stable revenue, and a solid repayment history typically qualify for lower interest rates. Conversely, companies with inconsistent cash flow, significant outstanding debts, or poor credit histories may face higher interest rates due to the perceived risk.

3. Type of Loan

The nature of the corporate loan significantly affects the interest rate. Typically, secured loans will lower interest rates since the lender has a security asset to recover losses if the borrower defaults. On the other hand, SME loans without collateral will come with higher interest rates because of increased risk for lenders.

4. Market Conditions

Interest rates fluctuate based on economic trends and financial policies. When the Monetary Authority of Singapore (MAS) adjusts benchmark interest rates, corporate loan rates follow suit.

Also, during periods of economic growth, interest rates could potentially rise because of increased credit demand. Conversely, in economic downturns, rates often decrease to encourage borrowing and business investment.

Why Choose Us for Your Corporate Loan?

LoanOwl makes the loan application process more seamless, helping you secure financing with minimal hassle and maximum efficiency.

• Access to Multiple Lenders: We work with top banks and alternative financiers to provide you with the best options.
• Tailored Loan Solutions: Get a loan package that aligns with your business goals.
• No Hidden Fees: Transparent loan terms with no unexpected charges.
• Time-Saving: We handle the entire process, reducing paperwork and approval time.
• Quick Approval & Disbursement:Faster processing ensures funds are available when you need them.

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