As inflation worsens and amidst rising costs, a growing number of small businesses are taking a hit. More than 85% of SMEs polled in a recent DBS survey said they are keeping purse strings tight. This is to ensure consistent cash flow and manage costs.
Thankfully, Singapore government has taken steps to help alleviate the impending economic challenges due to global inflation. One of the key measures is the increased loan quantum to S$500,000 per borrower for the Enterprise Financing Scheme – SME Working Capital Loan. This increase takes effect from 1 October 2022 to 31 March 2023, after the Temporary Bridging Loan Programme (TBLP) expired in September.
If you’re a struggling small-to-medium enterprise (SME) owner, you can improve cash flow with a business loan. Read on to learn more about your business loan options in Singapore.
Government-Assisted Business Loan Schemes
As an SME owner in Singapore, you will most likely require business financing at some point. This is especially true with the rising costs due to global inflation. Business loans can be used to:
- Expand your business
- Plug working capital gaps
- Finance inventory purchases
- Pay commercial property rental and purchases
- Improve cash flow for payroll
In Singapore, business owners can look to government-assisted business loan schemes to finance their business needs. These schemes were introduced in 2020 during the height of the COVID-19 pandemic. The most popular schemes are the Temporary Bridging Loan Programme and the SME Working Capital Loan.
|Temporary Bridging Loan Programme||SME Working Capital Loan|
|Maximum Loan Quantum||S$1 Million per borrower||S$500,000 per borrower|
|Maximum Repayment Period||5 years||5 years|
|Government Risk-Share||70%||50%Young enterprises may receive a risk share of 70%|
|Interest Rate||Capped at 5.5% p.a.||Subject to participating financial institution’s (PFI) assessment of risks involved|
|Deadline of Submission||Expired1 April 2022 to 30 September 2022||1 October 2022 to 31 March 2023|
Temporary Bridging Loan Programme (TBLP)
This was a government-assisted loan introduced in Budget 2020. It is designed to provide access to working capital for business needs. With this business loan, SMEs can borrow up to S$1 Million with the interest rate capped at 5.5% p.a.
Note that the Temporary Bridging Loan Programme scheme expired in September 2022 and the SME Working Capital Loan succeeded it.
Lastly, the TBLP is different from HDB temporary bridging loans. The latter is a type of HDB financing that helps homebuyers gain access to immediate funds to pay the downpayment of their new home while they wait for their old property to sell.
Enterprise Financing Scheme – SME Working Capital Loan (WCL)
This is another government-assisted financing scheme meant to help SMEs boost their cash flow. These funds can be used to expand your business. With this business loan, SME owners can borrow up to S$500,000 starting on 1 October 2022 to March 2023. The Singapore government risk-share is between 50% and 70%.
There are a total of 19 Participating Financial Institutions (PFI) in this scheme. Note that the criteria and interest rate will vary depending on the PFI.
Note that all unsecured business loan facilities require business owners to provide their personal guarantee (PG). Government financing schemes, such as SME WCL, bear certain risk sharing by Enterprise Singapore to the banks. However, the borrower is still liable and responsible to make timely repayments.
Participating Financial Institutions
If you wish to apply for SME working capital loans, you may approach any of the following PFI. Your business loan application will be subject to the banks’ credit approval.
|FINANCIAL INSTITUTIONS||CONTACT DETAILS|
|CIMB Bank Berhad||6438 7888|
|DBS Bank Ltd||1800 222 2200|
|ETHOZ Capital Ltd||6654 7799|
|FS Capital Pte Ltd||6221 0958|
|The Hongkong and Shanghai Banking Corporation||1800 216 9008 / 6216 9008|
|Hong Leong Finance Ltd||1800 3388 338|
|IFS Capital Ltd||6270 7711|
|Maybank Singapore Ltd||1800 777 0022|
|ORIX Leasing Singapore Ltd||6339 3622|
|Oversea-Chinese Banking Corporation Ltd (OCBC Bank)||6538 1111|
|Resona Merchant Bank Asia Ltd||6224 7155 / 6228 6124|
|RHB Bank Berhad||1800 323 0100|
|Sing Investments & Finance Ltd||6305 0300|
|Singapura Finance Ltd||6880 0688|
|Standard Chartered Bank||1800 747 7000|
|United Overseas Bank Ltd||1800 2266 121|
Ways A Business Loan Can Help Enterprises Cope With Inflation
Following the extension of the Working Capital Loan to succeed the Temporary Bridging Loan Programme, eligible companies can now borrow up to S$500,000. Aside from gaining access to funds, here are other ways a business loan can help SMEs.
Grow the Business’ Creditworthiness
Even if your business is not in dire need of cash, you can take up a business loan to build your credit history. If you are capable of repaying your SME loan on time, it will build your creditworthiness with financial institutions.
That said, if you end up requiring a business loan in the future, banks will see you as a creditworthy borrower, deserving of better terms and lower rates.
Borrow Now Before the Expected Interest Rates Rise
Borrowing money during inflation may seem counterintuitive, but taking advantage of the lower rates offered by government-assisted schemes will help you save on loan costs. These lower rates are only possible because Enterprise Singapore will share the loan default risk of 50% to 70%.
The rising costs resulting from inflation may force your business to take on additional expenses. It’s better to take up a loan now, while it is still available than when it expires. Without the government risk share, you will face higher interest charges.
Grab Business Opportunitiaes
Having extra cash on hand allows you to grab business opportunities you may otherwise miss. This could mean investing in additional inventory, equipment, or business expansion.
Even if your business already has good financial standing, extra funds can help push growth plans. This means having enough cash to finance the downpayment of new commercial property. Typically, the upfront costs of this business opportunity are usually heavy. A Working Capital Loan can cover the expenses while your business grows.
Scheme Is Ending Soon
These government-assisted schemes won’t be around forever. In fact, the Temporary Bridging Loan Programme has already expired. Thankfully, the SME Working Capital Loan has been enhanced and extended to 31 March 2023.
So grab the opportunity while you still can!
Top Bank Business Loans in Singapore
Aside from government financial schemes, business owners can also look to traditional bank loans. Here are some of the best business loans in Singapore.
|Banks||Maximum Business Loan||Loan Tenure||Interest Rate|
|DBS Working Capital Loan||S$500,000||Up to 5 years||Per bank assessment|
|OCBC Business First Loan||S$100,000||Up to 4 years||7.75% to 9.75% p.a.Per bank assessment|
|UOB BizMoney||S$300,000||Up to 5 years||Up to 10.88% p.a.Per bank assessment|
|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||Up to 11% p.a.|
If you need a large sum of cash, you may want to consider the DBS Working Capital Loan or Maybank Business Term Loan. With these SME loans, you can borrow up to S$500,000 with a maximum loan repayment of 5 years. Note that interest rates and fees may vary per bank.
For start-up enterprises, you may benefit from OCBC’s Business First Loan. It is easy to qualify since it only requires the applicant company to be at least 6 months old. Plus, no paperwork is needed. You only need to submit an online application.
What if you don’t qualify for government-assisted schemes or traditional bank loans?
Alternative To Bank Loans: Licensed Moneylender Business Loans
If the business loan options listed above are not available to you, you can turn to licensed moneylenders in Singapore. These legal lenders are registered with the Ministry of Law. Most importantly, they abide by the rules and regulations stipulated in the Moneylenders Act.
With a licensed moneylender, you can borrow up to S$200,000 with a maximum repayment of up to 24 months. Additionally, licensed lenders have less stringent credit criteria so your application can be processed quickly. This is beneficial for enterprises in need of fast cash.
|Maximum Business Loan||Loan Tenure||Interest Rate||Processing Fee|
|S$200,000||Up to 24 months, subject to the terms and conditions of the loan agreement||5-15%||Not applicable|
Before you deal with any money lender, make sure to verify their license and credibility. Visit the Ministry of Law’s website and check if the money lender is listed on the complete list of licensed moneylenders. On top of that, you can also read reviews and feedback from real clients on Google Reviews, Loan Advisor, and other trusted loan forums.
Aside from business loans, you can also tap personal loans to finance your business needs. With a personal bank loan, you can borrow up to 4x your monthly salary at interest charges between 11% and 14% p.a. With a money lender, you can borrow up to 6x your monthly income with an interest rate capped at 4% per month.
Business financing is not a one-size-fits-all solution. That said, it is best to evaluate how much capital you need, what you’re going to need it for, and if you can afford the repayments. Thankfully, government financing schemes, like SME Working Capital Loans, are available to offer business loans at affordable interest rates.
- Government-assisted business loans provide access to working capital for business needs.
- The Temporary Bridging Loan Programme scheme expired in September 2022 and the SME Working Capital Loan succeeded.
- With SME Working Capital Loan, SME owners can borrow up to S$500,000 starting on 1 October 2022 to March 2023.
- Business owners can also consider taking a business loan with licensed moneylenders. They can borrow up to S$200,000 with a maximum repayment period of 24 months.
Need access to quick cash for your business needs? Raffles Credit is one of the top licensed moneylenders in Singapore that offers tailored business loan plans at affordable rates. With over 504 excellent, 5-star reviews on Google, we make your loan application quick and hassle-free. Request a quotation from our friendly officers today!