Business Loans Singapore:

The Definitive Guide (2023)

Business loans Singapore; refers to a sum of money that a company borrows, to utilize for purposes related to the business. Funds are disbursed to the company, where the loan will be repaid with interest over a period of time.

Working capital loans for business are typically offered by the banks and financial institutions. There are many different types of business loans — unsecured business term loans, equipment and machinery loans, mortgage loans, micro loans, and various other asset-backed loans.

Each bank offers different types of corporate loans with different interest rates, which also come along with different criteria for eligibility.

However, you don’t have to go through the hassle of digging for all that information.

Let us do the heavy lifting for you.

Simply click on the button below to get a FREE eligibility assessment of your business, and compare all the best business loans for your company!

Table of Contents

Business Loan Types

Here is an updated list of the 13 best business loan types in Singapore:

  1. SME Working Capital Loan
  2. Business Term Loan
  3. SME Micro Loan
  4. Medipreneur Loan (for Doctors)
  5. Equipment Loan
  6. Crowdfunding
  7. Invoice Financing
  8. Commercial Property Loan
  9. Venture Debt Loan
  10. Project Loan
  11. Merger & Acquisitions Loan
  12. Trade Financing
  13. Overdraft

And here is a data table to help you see all the Singapore business loans at a glance:

Loan Type Max. Quantum Max. Repayment Period Interest Rate
SME Working Capital Loan
S$500,000
5 years
3.75% – 4.25% p.a.
Business Term Loan
S$500,000
5 years
4% – 5.5% p.a.
SME Micro Loan
S$100,000
4 years
3.5% – 4.25% p.a.
Medipreneur Loan
99% LTV
5 years
3.7% p.a.
Equipment Loan
90% LTV
5 years
2% – 3% p.a.
Crowdfunding
S$1 million
3 years
12% – 18% p.a.
Invoice Financing
80% LTV
120 days
7% – 8% p.a.
Commercial Property Loan
120% LTV
30 years
1.2% – 3% p.a.
Venture Debt Loan
S$8 million
5 years
N/A
Project Loan
S$50 million
15 years
N/A
Merger & Acquisitions Loan
S$50 million
5 years
N/A
Trade Financing
N/A
120 days
3% – 4% p.a.
Overdraft
N/A
120 days
5% – 6.5% p.a.

And now, here we present you with a brief writeup and explanation of each of the 13 business loan types:

1. SME Working Capital Loan

The SME Working Capital Loan is an initiative by Enterprise Financing Scheme (EFS) to help companies gain greater access to working capital. Not only are the interest rates low and charged based on a reducing balance model, there is no early redemption penalty as well.

  • Max. Loan Quantum: S$500,000
  • Max. Repayment Period: 5 years
  • Interest Rate: 3.75% – 4.25% p.a.

2. Business Term Loan

The Business Term Loan (BTL) is a typical collateral-free business loan that is processed ‘in-house’ and disbursed by the bank. It is not a part of the government-assisted loan schemes, and therefore bears the credit risk of the loan in full. Aside from the business loans by government, this is the most common type of SME loan offered by the banks.

  • Max. Loan Quantum: S$500,000
  • Max. Repayment Period: 5 years
  • Interest Rate: 4% – 5.5% p.a.

3. SME Micro Loan

The SME Micro Loan was initiated by the government to help small businesses gain greater access to micro business loans. Interest rates are indeed low, and charged based on a reducing balance model. No early redemption penalty.

  • Max. Loan Quantum: S$100,000
  • Max. Repayment Period: 4 years
  • Interest Rate: 3.5% – 4.25% p.a.

4. Medipreneur Loan (for Doctors)

Exclusively for medical doctors and dentists who want to set up a new practice or clinic. The prospect of a guaranteed business loan for new company is similar to a collateralized business term loan — in that it is seemingly secure and holds little risk of default.

  • Max. Loan Quantum: S$500,000
  • Max. Repayment Period: 5 years
  • Interest Rate: 3.7% p.a.

5. Equipment Loan

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

  • Max. Loan Quantum: 100% LTV
  • Max. Repayment Period: 5 years
  • Interest Rate: 2 – 3% p.a.

6. Crowdfunding

Crowdfunding is a good alternative to bank loans. It allows you to raise capital by crowd sourcing from a large pool of individual or institutional investors.

  • Max. Loan Quantum: S$1 million
  • Max. Repayment Period: 3 years
  • Interest Rate: 12% – 18% p.a.

7. Invoice Financing

Also known as invoice factoring, it is where a financier advances 80% – 90% of your customer’s outstanding invoice to you. Helps to ease cashflow. Mainly for businesses where you issue invoices on credit payments terms of between 30 – 120 days.

8. Commercial Property Loan

Mortgage loan for the purchase of commercial or industrial property. Existing properties can also be pledged as collateral for other business financing facilities. Low interest rates because the loan is secured with the property as collateral.

  • Max. Loan Quantum: 120% LTV
  • Max. Repayment Period: 30 years
  • Interest Rate: 1.2% – 3% p.a.

9. Venture Debt Loan

Finance the growth of innovative and high-growth companies. Must be tied to usage for a secured sales order or project. It cannot be used solely for general working capital/operating expenses.

  • Max. Loan Quantum: S$8 million
  • Max. Repayment Period: 5 years
  • Interest Rate: N/A

10. Project Loan

Finance the fulfilment of secured overseas or local projects. Can be obtained in the form of a working capital loan, building/land financing, equipment financing, invoice financing or a banker’s guarantee.

  • Max. Loan Quantum:
    – S$50 million for overseas projects
    – S$30 million for local projects
  • Max. Repayment Period:
    – 15 years for Fixed Asset loans
    – 5 years for Working Capital Loan and Guarantees
  • Interest Rate: N/A

11. Merger & Acquisitions Loan

Finance the acquisition of local or overseas businesses, with the intent of internationalisation.

  • Max. Loan Quantum: S$50 million
  • Max. Repayment Period: 5 years
  • Interest Rate: N/A

12. Trade Financing

Trade financing is the financing of domestic and international trade and commerce for imports or exports. Usually a revolving credit line to finance the purchase of inventory or materials from suppliers.

The scope of trade financing also covers the issuance of the Letter of Credit (LC), invoice financing, Trust Receipts (TR), Bank Guarantees and the Standby Letter of Credit (SBLC).

13. Overdraft

A revolving credit line to boost cashflow. Can be either unsecured or secured with properties or fixed deposits. No fixed repayment schedule as it is a revolving credit line.

Get Your SME Loan Today To Grow Your Business.

12 Best Banks For Small Business Loans in Singapore

As of October 2022, the Temporary Bridging Loan program was discontinued. But do not worry.

Let us all be grateful for all the beautiful things in our lives. Let us be thankful that the Singapore government was able to efficiently roll-out so many financial-assistance programs to help local businesses survive through the Covid-19 pandemic.

Now, it is time to leverage on other government-assisted loans for additional support to manage rising costs and accelerate business growth(Last updated 12 Dec 2022)

Here are the 12 best banks and financial institutions for getting your unsecured business loans for startups:

Financial Institution Loan Type Interest Rate
DBS
SME Working Capital Loan
3.25% – 4.25% p.a.
Maybank
SME Working Capital Loan
3.375% – 4.5% p.a.
OCBC
SME Working Capital Loan
3.25% – 4.25% p.a.
UOB
SME Working Capital Loan
3.5% – 4.5% p.a.
Citibank
Business Term Loan
5.75% – 6.75% p.a.
Stan Chart
SME Working Capital Loan
3.5% – 4.5% p.a.
RHB
SME Working Capital Loan
3.5% – 4.5% p.a.
CIMB
SME Working Capital Loan
3.25% – 4.5% p.a.
Hong Leong Finance
Business Term Loan
3.6% – 4.75% p.a.
Orix
SME Working Capital Loan
3.5% – 4.5% p.a.
Ethoz
SME Working Capital Loan
4.88% – 5.88% p.a.
Singapura Finance
Business Term Loan
4.88% - 5.88% p.a.

As you may have noticed before, all of the above banks were participants in the EFS — Temporary Bridging Loan (TBL), which was an initiative by the government to help businesses through the Covid-19 pandemic.

However, not all of them are onboard with the SME Working Capital Loan program with EFS.

The Temporary Bridging Loan WAS the best SME loan option with the lowest interest rate in the market. 

To all business owners with existing bank loans, we hope you applied for the TBL and used the funds to pay off your existing loans. This would have helped to greatly reduce the total interest that you will eventually pay.

How To Get A Small Business Loan

The application process for small business loans varies depending on the loan type. Short-term loans normally require less paperwork than long-term loans, and an equipment loan typically requires less paperwork than a business line of credit.

However, in order to boost your chances of acceptance, prepare the following documents and have them ready on hand:

  • Bank statements (Latest 6 months)

Most recent 6 months of bank statements. It keeps track of how much cash your company has on hand at any given time. While a profit and loss statement accounts for non-cash costs such as depreciation, bank statements reflect the strength of my show how much cash is available for monthly bills.

  • Profit and Loss statements (Latest 2 years) 
Financial statements summarize revenue and costs, and resulting profit or loss over 2 years. Also known as a P&L or income statement.

  • Balance sheets (Latest 2 years)
Shows what the business owns and owes at any given time. Because the information given varies by industry, there is no standard structure for balance sheets.

  • Business and Personal taxes (Latest 2 years)
Business and personal tax returns from the previous 2 years, which lenders use to verify income and show your ability to repay the loan. Your business accountant can help you compile the financials and tax paperwork required to support your small business loan application, as well as advise you on accounting and tax matters.

Small Business Loan Required Documents

You should start gathering the essential papers for your SME loan application once you’ve concluded that your company can handle taking on a loan.

The actual paperwork varies depending on the business financing partner, but it will almost certainly comprise the following. 

So be sure have get these documents ready for your SME Loan application:

  • Latest 2 years of personal (Director’s) income tax returns 
  • Latest 6 months company bank statements
  • Last 2 years profit and loss statements
  • Last 2 years balance sheets
  • ACRA bizfile profile
  • Information on existing debts
  • Business license (if applicable)
  • Include an additional guarantor for the loan, if possible
infographic about 5 reasons to take a business loan in singapore

Banks With The Lowest Business Loan Interest Rates

Different banks and financial institutions have different interest rates for the various products they offer. The typical business term loan has a simple interest rate of between 3.5% – 6.75% p.a.

However, with respect to the Temporary Bridging Loan (TBL), the banks with the lowest interest rates are Maybank, DBS business loan, OCBC business loan and UOB business loan, offering simple interest rates of between 1.5% – 2.25% p.a.

Get Your FREE Loan Assessment Today

Startup Business Loan Singapore

Finding it hard to get a startup business loan for your startup venture?

We hear you… and we got you.

Singapore is a tough place for a startup to survive. Financial support for startups is scarce, and the cost of operating a business is high. Having said all that, sometimes you just gotta put on some grit and push through.

A start up business loan is a term loan meant specifically for startups that do not have much of a business history yet. Other than a few institutional lenders that are offering small business loans, there aren’t many start up loan options in Singapore.

Recognizing this problem in the last few years, the Singapore government has made concerted efforts to launch a number of funding initiatives to support the rise of startup ventures in the country. 

Some of the start up SME loans and grants in the market include the SME Micro Loan, Medipreneur loan, OCBC Business First Loan, Early-Stage Venture Funding, and the Capability Development Grant.

For startup businesses in SG, the options for funding are few. While there are some options for grants and private equity funding, most banks do NOT offer business startup loans to companies that have not been in operations for at least 6 months.

In fact, most banks require businesses to be in active operation for at least 2 years before they will consider offering a loan for business startups. This is because startup companies with no operational history are deemed as entities with a higher credit risk.

However, do not be discouraged… 

Even though the chances for bank financing is low, there are other options that can be considered, such as grants, crowdfunding and private equity funding. 

Get in touch with us and we will be happy to help you raise the funds you need!

The table below shows all the business loan options that are available to startups in Singapore: 

 

Startup Biz Loan Options Interest Rate Max. Loan Amount Repayment Period
SME Micro Loan
3.2% - 5.5% p.a.
$100,000
Up to 5 years
Business First Loan
3.2% - 5.5% p.a.
$100,000
Up to 5 years
Temporary Bridging Loan
1.5% - 2.5% p.a.
$3 million
Up to 5 years
Venture Debt Loan
2.5% - 11% p.a.
$8 million
Up to 5 years
Medical Professionals
2.5% - 4.5% p.a.
$500,000
Up to 5 years
Personal Loan
6% - 9% p.a.
12x monthly income
Up to 5 years
Crowdfunding
12% - 18% p.a.
$300,000
Up to 24 months
Invoice Factoring
1% - 1.5% per month
Up to 80% of invoice value
30 - 120 days

The Money Problem That Most Startups Face

One of the most commonly faced problems of any startup business is a shortage of capital. Cash flow can make or break a company.

To add to the problem of insufficient funds, these startups often have no way to get access to additional capital. 

When this happens, company operations are forced to halt, thus ending a dream before it even began. Even startups that were able to successfully raise sufficient seed funding often run into capital shortage issues after a period of time.

For startup ventures to thrive, access to working capital is critical. That is why Enterprise Singapore was set up to help solve this problem. 

Tailored to meet the needs of a startup, the Medipreneur Loan is especially popular among medical doctors and dental surgeons who want to set up a private practice. 

For any lender, it would be a no-brainer as the mortgage loan is asset-backed, which means much less risk. We also know that the business of a doctor or dentist is very stable and ‘weatherproof’, so the chances of a default is significantly less than with anyone else.

More than helping to kick-start a business, startup financing solutions have also helped many entrepreneurs to:

  • Improve cash flow
  • Enhance financial budgeting
  • Seize expansion opportunities

Check out this best business loan Singapore infographic

startup business loan infographic

What Business Loans Are Available For Startups?

Let us dive into more details about the most popular business loans options for startups in Singapore.

1. SME Micro Loan — OCBC Business First Loan

EFS is a government agency that seeks to support enterprise development in Singapore. The agency has initiated a number of the cheapest business loans Singapore that has helped to fund many new local ventures through different stages of growth.

The SME Micro Loan is the most popular SME loan scheme for startups by far. You can get up to S$100,000 to finance the cost of daily operations. In order to obtain the SME Micro Loan, your business will have to pass the eligibility criteria, which might vary between participating financial institutions and banks.

One of the most active banks offering the SME Micro Loan — as Business First Loan — is OCBC, where there is a minimum requirement for a new venture to have been registered and operating for at least 6 months. Most other banks will require for companies to be registered and operating for at least 2 years.

2. Medipreneur Loan (for Doctors)

Offered by only two financial institutions in Singapore, the loan for medical professionals seeks to provide doctors and dentists with funding to set up private practice.

In most cases, the startup business loan can also be accompanied by an equipment loan to finance the cost of all medical equipment.

To qualify for the business loan, the medical professional will have to meet the following criteria:

  • Singapore Citizen or PR
  • Have a healthy personal credit history
  • Possess a valid medical license
  • Registered with Singapore Medical Council

For medical professionals who are permanent residents in Singapore, approval chances are significantly higher if you have ownership of a residential property.

3. Private Equity Funding

Raising funds through the sale of equity in your new company is a popular method of raising funds for working capital. You will need to present your business idea and convince prospective investors that your business will make money for them.

To accomplish this, you will need to have an innovative business idea, a solid business plan, justifiable cash flow projections, an effective working team and a really good sales pitch. 

In most cases, investors earn their returns via dividends on the shares they hold in your company. This means that their returns will be determined by the profitability and success of your business.

4. Venture Capital Funding

A typical venture capital (VC) is usually a fund that invests in startup businesses. The general idea for any venture capitalist is that the potential upside from a successful venture can outweigh the limited downside — which is usually a small initial investment.

With venture capital funding, investors tend to want to be involved in the business, which has both pros and cons. While a venture capital investor can offer much expertise and experience in running a business, this can sometimes lead to a control struggle.

Venture Capital firms usually look to make a profitable exit from their investments within a period of 2 to 5 years. In recent years, there has been a growing trend in venture capital firms to place their focus on high growth tech startups, where returns could potentially be multiples of an initial capital injection.

What Business Is Lacking In Singapore?

Well… other than the lack of the cannabis and vape business, we reckon that Singapore does not seem to have much of a supportive ecosystem for new venture startups.

While the government has made concerted efforts to encourage lending to startups in Singapore, the truth is that access to funding or working capital still remains a constant struggle for most new entrepreneurs in Singapore.

Most banks and financial institutions tend to be apprehensive to the idea of lending to new ventures, and understandably so. The risk that comes with lending to a startup is exponentially higher than with lending to an already established business.

Banks rely heavily on the financial track records of a company to determine credit worthiness. For a new business with almost no financial history, it becomes a challenging task for any lending institution to gauge the credit worthiness of the company.

Therefore, for most new entrepreneurs, it is often easier to raise funds via private equity funding or simply borrowing from family and friends.

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Exclusive Pro Tip!

How your credit score affects your business loan application

It is compulsory for all unsecured business loans to be accompanied by a personal guarantee from at least one company Director.

That means that your personal credit score will play a very important part in your small business loan application.

Along with an assessment of your company’s financial strength, banks will also look at your personal credit bureau rating.

The better your credit bureau score, the higher your chances of getting a business loan in Singapore.

Now:

Before you start applying for a corporate bank loan, you should obtain a copy of your personal credit bureau report first. It can be purchased for from creditbureau.com.sg for S$6. This way, you get to see exactly what the banks and financial institutions will be looking at.

You must be wondering right now…

“What kind of credit score will I need in order to qualify for a business loan?”

Generally, you will need to have a credit rating of AA, BB or CC to qualify for any loan.

The credit rating system allocates a grade to individuals in the range of AA – HH, with AA being the best grade, and HH being the worst.

If your credit score happens to be a CC and below, do not be dismayed. Instead of rejecting you, banks may impose further conditions that you will have to fulfill, such as providing an additional guarantor to the loan, or collateral to secure the loans.

image depicting man thinking about money

How To Analyze Your Credit Bureau Report

What do you do after getting your credit bureau report?

If it happens to look like a big mix of boring numbers and alphabets that don’t make sense, don’t worry. Here’s how to understand your credit bureau report.

How to proceed:

The first thing to do is to check for mistakes and errors.

There may be errors on your credit report that could possibly affect your credit score.

Be sure to check for the following:

  • Personal credit lines that you have never opened.
  • Outstanding debts that do not belong to you.
  • Payments for a credit facility that you have never used.
  • Debts that you have repaid but are still reflected on the report.

Before you attempt to rectify anything, first verify that the information is actually erroneous.

If the mistake has to do with a debt that you have already repaid, then you should contact the lending institution and ask them to inform the credit bureau that you have already satisfied the debt.

Or, if the error has to do with an outstanding debt that does not belong to you, be sure to ask the related financial institution to rectify the issue and to update the credit bureau.

As a last resort, you could also contact the credit bureau directly, where they will be obligated to investigate the matter.

Once the matter has been resolved, you can purchase your credit report again to check if the errors have been rectified and updated in your report.

However, if you do not find any errors and still have a poor credit rating, identify the areas that you can improve on and work towards achieving a better credit score.

infographic on ways to use a small business loan

General FAQ

A typical business loan is usually unsecured, has a quantum of about S$300K – S$500K, and has a repayment period of up to 5 years.

Banks usually require a company to have a yearly revenue of at least S$150,000 – S$200,000 before approving a business loan.

The interest rate of unsecured business loans vary from 3.5% – 5.5% p.a.

Required documents for assessments may vary from lender to lender. However, these are the general documents required — Past bank account statements, Profit and Loss statements, Balance sheets, Income tax returns of Directors, Identification proof of Directors, and Information on existing debt facilities.

Unfortunately, banks in Singapore do not provide loans to start a business. However, you can try getting a personal loan, and then use that capital to start a business.

Generally, businesses that have been registered and operating for at least 2 years are eligible. The company will also need to meet other criteria — such as having an annual turnover of at least $300,000, and a healthy bank account that maintains a daily average of at least $15,000.

To name a few, these are some of the banks that we have worked with for many years. In our professional experience, DBS, Maybank and OCBC were the banks that had the highest rate of business loan approvals.

Minimum income or revenue of the company should be at least $300,000 annually. For the Director who has to provide personal guarantee, the annual income has to at least $30,000 per year.

Yes, but the options are few and far. Other than the SME Micro Loan, there are no other options like Crowdfunding.

Always start by approaching the banks first. If that fails, look for alternative lenders like crowdfunding platforms, or even VCs and equity financing firms. And last but not least, you can also approach family and friends whom you are close with.

Other than the SME Micro loan, and the Medipreneur loan for Doctors, crowdfunding platforms may be a viable option.

No, you cannot. Most banks and financial institutions in Singapore will require for the Director(s) to show income proof.

Business loans that are segregated and disbursed to companies that have at least 51% shareholding owned by people of particular ethnicities.