Business Loans Singapore:
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All About Business Loans Singapore

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. Bank loans for business are typically offered by banks and financial institutions.

There are many different types of bank loans, like unsecured bank loans, equipment and machinery loans, working capital loans, micro loans, and various other asset-backed loans. Each bank and financial institution offers different types of SME loans with different interest rates, along with different conditions to qualify.

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

Click on “Get Funded Now” to get a FREE assessment, and compare all the best business loans for you!

SME loans help entrepreneurs in establishing, maintaining, or expanding their businesses. There are a range of banks and financial institutions to choose from, which may have easier prerequisites and speedier applications. Getting an SME loan for your firm doesn’t necessarily need walking into a bank and getting financing.

If you want to compare all the best SME loans in one place, then you’ll love this guide.

The best part?

We’ll even teach you some EFFECTIVE strategies to help you get your business loan approved – that are working GREAT right now (in 2022).

So, if you are here because you need an SME loan

…You are in the right place.

Let’s get started.

business loans in Singapore

Types of Business Loans

Temporary Bridging Loan

The Temporary Bridging Loan was introduced by the government during the Covid-19 period to help businesses have better access to more capital.

With the government sharing risk of up to 90%, the TBL comes with super low interest rates, increased maximum loan quantum, and a generous repayment period of up to 5 years.

  • Loan Amount: Up to $3 million
  • Repayment Period: Up to 5 years
  • Interest Rate: 1.5% – 2.5% per annum
  • Speed: 2 weeks

SME Working Capital Loan

The SME Working Capital Loan Loan is a financing initiative under the Enterprise Financing Scheme (EFS) to help companies gain greater access to unsecured working capital. Not only are the interest rates attractive, interest charged is based on a reducing balance model. 

  • Loan Amount: Up to $300,000
  • Repayment Period: Up to 5 years
  • Interest Rate: 2.5% – 3% per annum
  • Speed: 2 weeks

Unsecured Business Term Loan

In-house bank business term loans which are not a part of the government-assisted loan schemes. Aside from the Enterprise Financing Schemes, this is the most common type of SME loan for general working capital.

  • Loan Amount: Up to $500,000
  • Repayment Period: Up to 5 years
  • Interest Rate: 3.2% – 5.5% per annum
  • Speed: 2 weeks

SME Micro Loan

The SME Micro Loan was launched by the government to help SMEs gain greater access to unsecured working capital. Interest rates are low and charged based on a reducing balance model. 

  • Loan Amount: Up to $100,000
  • Repayment Period: Up to 4 years
  • Interest Rate: 2.5% – 3% per annum
  • Speed: 2 weeks

Startup Business Loan For Medical Professionals

Mainly for medical doctors and dental surgeons who want to set up a new practice or clinic. The structure of the business start up loans is similar to a traditional business term loan — in that it is usually an in-house term loan.

  • Loan Amount: Up to $500,000
  • Repayment Period: Up to 5 years
  • Interest Rate: 2.25% per annum
  • Speed: 2 weeks

Equipment Financing

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

  • Loan Amount: Up to 100% of equipment value
  • Repayment Period: Up to 5 years
  • Interest Rate: 1.8 – 2.5% per annum
  • Speed: 2 weeks

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.

  • Loan Amount: Up to $5 million
  • Repayment Period: 12 – 36 months
  • Interest Rate: 12 – 18% per annum
  • Speed: 2 weeks

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.

Commercial Property Financing

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.

  • Loan Amount: Up to 120% of the property value
  • Repayment Period: Up to 30 years
  • Interest Rate: From 1.2% per annum
  • Speed: 2 weeks

Vessel Financing

For businesses in the Marine and Offshore Engineering industry. Finance up to 70% of the value of used or new vessels.

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.

  • Loan Amount: Up to $8 million
  • Repayment Period: Up to 5 years
  • Interest Rate: –
  • Speed: 3 weeks

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.

  • Loan Amount:
    Up to $50 million for overseas projects
    Up to $30 million for local projects
  • Repayment Period:
    Up to 15 years for Fixed Asset loans
    Up to 5 years for Working Capital Loan and Guarantees
  • Interest Rate: –
  • Speed: 3 weeks

Merger & Acquisition (M&A)

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

  • Loan Amount: Up to $50 million
  • Repayment Period: Up to 5 years
  • Interest Rate: –
  • Speed: 3 weeks

Other Business Financing Options

Trade Financing

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).

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.

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12 Best Banks For Business Loans in Singapore

As the information below are government-aided schemes to provide relief for businesses during the Covid-19 period, we will also be making sure that the information listed is as updated as possible.

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

Financial Institution Loan Type Interest Rate
DBS
Temporary Bridging Loan
1.5% - 2.5% p.a.
Maybank
Temporary Bridging Loan
1.5% - 2.5% p.a.
OCBC
Temporary Bridging Loan
1.5% - 2.5% p.a.
UOB
Temporary Bridging Loan
1.5% - 2.5% p.a.
Citibank
Temporary Bridging Loan
1.5% - 2.5% p.a.
Stan Chart
Temporary Bridging Loan
1.5% - 2.5% p.a.
RHB
Temporary Bridging Loan
1.5% - 2.5% p.a.
CIMB
Temporary Bridging Loan
1.5% - 2.5% p.a.
Hong Leong
Temporary Bridging Loan
1.5% - 2.5% p.a.
Orix
Temporary Bridging Loan
1.5% - 2.5% p.a.
Ethoz
Temporary Bridging Loan
1.5% - 2.5% p.a.
Singapura Finance
Temporary Bridging Loan
1.5% - 2.5% p.a.

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

The Temporary Bridging Loan is currently the best SME loan option with the lowest interest rates in the market. 

For many businesses with existing bank loans, you may apply for the TBL and use the funds to pay off your existing loans. This will help to greatly reduce the total interest that you are currently paying.

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 equipment financing typically requires less paperwork than a business line of credit. However, in order to boost your chances of acceptance, it’s still a good idea to have the following documents on hand in case they’re requested:

Bank statements

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 show how much cash is available for monthly bills.

Profit and Loss statements

Summarizes revenue and costs and resulting profit or loss over 2 years. Also known as a P&L or income statement.

Balance sheets

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

Business and personal tax returns from the previous two years, which lenders use to verify income and show your ability to repay the loan. Your business accountant can help you compile the financial and tax paperwork required to support your small business bank loan application, as well as advise you on accounting and tax matters.

Small Business Loan Application Checklist

You should start gathering the essential papers for your 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:

  • 2 years of personal and business tax returns company bank account
  • Recent profit and loss statements
  • Past balance sheets
  • ACRA bizfile profile
  • Information on existing debts
  • Business license (if applicable)
  • Include an additional guarantor for the loan

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% per annum.

However, with respect to the Temporary Bridging Loan, 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% per annum.

Startup SME Loans

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 start up 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 dismayed. 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!

EXCLUSIVE Bonus Tips

How your credit score affects your business loan application

It is compulsory for all unsecured SME loans to be accompanied by a personal guarantee from at least 1 company director.

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

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

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

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 $6 from creditbureau.com.sg. 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 an SME business loan?”

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

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.

General FAQ

How does a business loan work?

Business loans are usually unsecured and have repayment periods of up to 5 years.

How much revenue do you need to get a business loan?

Typically, banks require a business to have a yearly revenue of at least $300,000.

What is the interest rate of business loan?

The typical business loan interest rate varies from 3.2% to 5.5% per annum.

What documents are needed to apply for SME loan?

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.