Are you one of those businesses struggling to make ends meet due to the pandemic?
You’re not alone. Many small and medium-sized enterprises (SMEs) are struggling to keep afloat amid the series of Circuit Breaker measures in Singapore. Although these measures aim to prevent the spread of COVID-19, it has caused revenue streams to dry up. Thankfully, you can apply for SME business loans in Singapore with the best interest rates.
What are the Business Loans Available in Singapore?
|Name of Loan||Maximum Loan||Loan Tenure||Interest and fees||Government Risk Share|
|SME Working Capital||S$300,000 million||Up to 5 years||Per bank or FI assessment||50-70%|
|Temporary Bridging Loan||S$3 million||Up to 5 years||Up to 5% per annum||90%|
SME Working Capital Loan
The SME Working Capital Loan (WCL) is a financing initiative by the Singapore government to provide assistance of up to $300,000 working capital for Singapore firms. SMEs have the option to repay the loan at any period with no penalty and a pro-rated interest. The maximum loan tenure is up to 5 years.
Enterprise Singapore is working together with participating financial institutions (FIs) with between 50% to 70% risk sharing. Interest rates may vary depending on the bank or financial institution.
– Business must be registered and physically present in Singapore.
– At least 30% owned locally.
– Maximum borrower group cap of S$500 million.
– Maximum group revenue of S$100 million or 200 employees.
Temporary Bridging Loan
The Temporary Bridging Loan is another government-assisted scheme that provides SMEs access to working capital.
From April 1 to September 30, 2021, the maximum loan amount that eligible SMEs can borrow is $3 million with an interest rate capped at 5% p.a. The maximum repayment period is up to 5 years. However, borrowers can apply for a one-year deferral of principal repayment. The approval is subject to the financial institution’s evaluation.
|Till March 31, 2021||From April 1 to September 30, 2021|
|Maximum Loan Amount||$5 million||$3 million|
|Government Risk Sharing||90% risk sharing||70% risk sharing|
– Business must be registered and physically present in Singapore.
– At least 30% owned locally.
Bank Business Loans
|Name of Loan||Maximum Loan||Loan Tenure||Interest and fees||Eligibility|
|DBS Business Loan||S$500,000||Up to 5 years||Per bank assessment|| |
|OCBC Business First Loan||S$100,000||Up to 4 years||Per bank assessment|| |
|UOB SME Working Capital Loan||S$300,000||Up to 5 years||Per bank assessment|| |
|UOB BizMoney Loan||S$350,000||Up to 5 years||10.88% per annum |
2% facility rate
S$500 annual fee
|Maybank Business Term Loan||S$500,000||Up to 5 years||Per bank assessment|| |
|Standard Chartered Business Instalment Loan||S$300,000||Up to 3 years||Per bank assessment|| |
DBS Business Loan
DBS is one of the most established banks in Singapore. They also offer the most competitive rates for their business loan products. With the DBS Business Loan, SMEs can borrow up to S$500,000 and have the option to repay the loan for up to 5 years. Since it is not government-backed, all Singapore-registered businesses can apply.
A traditional banking loan like this one is perfect for companies that have a stable source of income and annual sales.
OCBC Business First Loan
OCBC’s Business First Loan provides SMEs with up to S$100,000 financing. The maximum loan tenure is up to 4 years and since it is an unsecured loan, no collateral is required. However, SMEs may need at least one Guarantor with the following eligibility:
– At least 21 years old
– Singaporean or Permanent Resident
– Minimum annual income of S$30,000
This is a wonderful startup business loan, making it ideal for small companies with no more than 10 employees and have been operating for at least 6-24 months.
UOB SME Loan
The UOB SME Loan is similar to OCBC’s Business First Loan. It allows SMEs to take out a loan up to S$100,000 with a maximum loan tenure of up to 3 years.
This business loan is open to a sole proprietor, partnership, or private limited companies that are registered, at least 30% locally owned, and have been operating in Singapore for at least 3 years. Additionally, your business must not have more than 200 employees.
UOB Bizmoney Loan
With a UOB Bizmoney Loan, SMEs can borrow up to S$350,000 which is a slightly higher cap than most banks. Additionally, small businesses have the option to repay the loan for up to 5 years. However, the effective interest rate is at 10.88% per year with a processing fee of 2%. There’s also an annual fee of $500.
So take these into account when considering taking a business loan from UOB.
This loan is open to a sole proprietor, partnership, or private limited companies that are registered and are operating in Singapore for at least 3 years.
Maybank Business Term Loan
If you’re looking for a much larger business loan, then Maybank Business Term Loan might be just what you need. The loan provides borrowers up to S$500,000 with a repayment period of up to 5 years.
To qualify, your business needs to be registered and has been operating in Singapore for at least 36 months. It must also be at least 30% locally owned with a minimum turnover of S$300,000 per year.
Standard Chartered Business Instalment Loan
With the Standard Chartered Business Instalment Loan, SMEs can borrow up to $300,000 with a repayment period of up to 3 years. The interest rate is based on the bank’s assessment but it is capped at 11%.
Businesses are eligible for this loan if the company is registered and operating in Singapore for at least 3 years. Your business must also have a minimum annual turnover of S$750,000. That said, this loan option is good for companies that have a stable source of income and annual sales.
What If I Don’t Qualify For Bank And Government-Assisted Loans?
SMEs have a lot of alternative financing options to choose from. However, not everyone qualifies for a business loan. If your application gets rejected or you don’t meet the eligibility criteria, there are other ways to secure funding.
Invoice factoring is a type of business financing that trades a business’ outstanding invoices for cash. So how does it work?
When your business urgently needs extra funds, you can sell your unpaid invoices to a third-party company. The company pays a portion of the value of the invoices and will be in charge of collecting the invoice payments. Once they collect the balance amount from your customers, they will pass it on to you, deducting the fees payable.
With this business financing scheme, you can get up to 90% of the value of your invoices in cash. Invoice factoring in Singapore is perfect for SMEs that are facing cash flow issues or need help collecting payments from customers.
That said, it’s a good way to get funds quickly. But you’ll also be sacrificing a portion of your revenue upfront.
Another option is to take out a loan from a licensed moneylender. These are lenders approved by the Ministry of Law. You can check their license and credibility at the Ministry of Law’s website. They have a list of all licensed moneylenders in Singapore.
|Maximum Loan Amount||Interest Rates||Eligibility|
|Up to S$200,000||Depends on the loan amount, tenure, and other terms |
Range from 5% to 15%
One of the financial products offered by licensed lenders is a business loan. You can use the funds for anything that your business needs, such as paying your staff, expanding operations, or settling off certain debts.
With a licensed moneylender, you can borrow up to S$200,000. However, if your business needs more funds, you can consider taking out a secured loan. This type of loan will require collateral.
What about the interest rate?
According to the Ministry of Law Singapore, all moneylenders can only charge up to 4% per month interest rate for all personal loans. However, this doesn’t apply to a business loan.
A business loan has different rates and is subject to the moneylender’s assessment. Typically, it ranges from 5% to 15%.
Why take a business loan from a licensed moneylender?
– Quickly pay off outstanding debts.
– Reduce the blow of economic problems. With a business loan from a licensed moneylender, you’ll be able to get urgent cash to tide over these choppy times.
– Quick expansion without any hassles. Licensed moneylenders are less stringent than banks. They’ll only look at your ability to repay the loan. That said, you can quickly receive your loan.
Borrowing from a licensed moneylender is a good option for those who don’t qualify for a bank business loan. Or if the business needs urgent cash to pay for unexpected expenses.
Other Things To Know
1. What is the average business loan interest rate in Singapore?
Different banks and financial institutions charge different interest rates. However, the average business loan interest rate in Singapore ranges between 3.5% to 7% p.a.
2. How long is the application process?
Most banks are very meticulous when evaluating business loan applications. That said, it usually takes between 2-3 weeks to process a loan application. For some complex cases, it may take up to a month.
If you urgently require cash, you may consider taking a loan from licensed moneylenders. They can disburse cash within the same day.
3. What if my business is a start-up?
There are very few banks that offer SME business loans for start ups. One option is OCBC’s First Business Loan since it only requires that your company be operating for 6-24 months.
But if you still don’t qualify, you may apply for an unsecured business loan from a licensed moneylender. To qualify, you’ll only need one year of business history and a minimum turnover of $60,000 a year.
As the economy tries to recover amidst the COVID-19 pandemic, small and medium businesses may require additional financial support. Acquiring a business loan in Singapore will help you bridge the gap so you can tide over these challenging times.
Thankfully, there are government-assisted SME loans as well as bank loans you can consider. Additionally, you can apply for a loan from licensed moneylenders if you need urgent cash. Raffles Credit is a distinguished licensed moneylender who can give you the financial assistance you need to stay afloat.