Singapore gives businesses of every size the perfect opportunity to make partnerships and establish their brands. However, starting up a business to reach the fair market ground will require years of planning and saving money. Fortunately, you can apply for a startup business loan Singapore conveniently thanks to the numerous financial institutions, banks, and other financiers available in the country.
What is a Start up Business Loan Singapore?
An entrepreneur has three choices to accumulate financing enough to jump-start and keep their business moving rapidly:
• Save enough money for more than a decade to begin their business
• Ask friends, family, and other colleagues to become partners or benefactors
• Apply for and use financing from banks and financial institutions
The third option is a business start up loan. Most banks and financial institutions offer them as a standard product for any entrepreneur. If you fulfill its set of eligibility and requirements, you can finance your business quickly.
Furthermore, you can use Singapore business loans for any purpose, such as expanding your operations or accumulating new equipment or branches.
How Do Startup Business Loans Work?
A start-up business loan in Singapore works similarly to personal loans. However, it uses income and business performance data instead of your exclusive personal income and career information to provide financing.
Like personal loans, you’ll need to pay the financing regularly. However, because it can take longer than personal loans to pay, you’ll deal with the per-year interest rate. In most cases, a business loan has a loan tenor from 1-5 years.
List of The Best Start-Up Business Loan Options in Singapore
Here are some of the best business loans in Singapore that numerous Singaporean banks offer. These are the current best in the market. You can find more options in loan and financing comparison websites.
|Startup Loan Product||Interest Rate||Maximum Loan Amount||Repayment Period|
|SME Micro Loan||3.5-4.5% per year||S $100,000||1-5 years|
|SME Venture Loan||2.5-11% per year||S $5 million||3-5 years|
|First Business Loan||3.2-4.5% per year||S $300,000||1-5 years|
|Startup Loan for Medical Doctors and Dentists||2.5-4.5% per year||S $500,000||1-5 years|
|Personal Loan for Business||6-9% per year||12x of monthly income||1-5 years|
|Unsecured Loan||12-18% per year||S $200,000||3-24 months|
|Invoice Factoring||1-1.5% per year||Can reach up to 80% of invoice value||30 -120 days|
How Can a Startup Business Loan Help Entrepreneurs?
For most companies, a startup business loan helps secure a physical facility, equipment and tools, raw materials, permit and certification dues, and the first-year salary of employees.
Additionally, companies can use it to expand their operations and scale the business in many ways. If you qualify for business loans, you can quickly achieve the following.
1. Stabilize Cash Flow
Your first year as a business had been a blast. The company has made a brand and name for itself. Additionally, it has elevated its status in the local market. Unfortunately, an unprecedented event derailed your business plans, having you suffer substantial losses the following months of the next year.
With a business loan, you can stabilize your business operations without suffering from significant processes. Furthermore, you have enough funding for researching new methods to expand and improve your brand’s performance.
2. Create Budgets for New Processes
If your business continues to do well, you might want to consider business loans in Singapore to upgrade your existing equipment and take business performance to the next level.
You can create budgets for new processes with a fixed amount banks, financial institutions, and other moneylenders can provide to you. If you find low-interest and adequate financing, you can scale the business, accommodate more customers, and improve your performance.
3. Take Advantage of Opportunities
A local venue you’ve tagged as an optimal branch for your business if you’ve owned it is suddenly selling it at a low, rush-selling price. However, you lack money to purchase a new branch, and it will take you a decade to reach the selling price despite being low.
With a Singapore business loan, you can secure the property quickly and pay for it later. You might need to explain your business plan involving the property with the bank or financial institution. However, you can get the property and grab the opportunity immediately once you receive your financing approval.
Eligibility and Requirements for Startup Business Loan
A business plan and reliable income are two things any entrepreneur needs to receive banks and other financiers’ financial services. After you’ve compared financing interest rates for the start-up working capital loan, your loan application will ask you for the following proof of eligibility and documentation.
Most financial institutions in Singapore ask for these requirements, so make sure to have them on hand before starting your loan application.
• Singapore-registered business
• A minimum of one-year operations in Singapore
• S $60,000 minimum yearly profit/turnover
• All business directors and partners’ NRIC
• Accounting & Corporate Regulatory Authority (ACRA) recent business profile and information report
• Personal (partners) and the company’s recent income tax assessment notice
• A few recent months’ financial statements
• Invoices and business contracts in the past few months
• Recent utility bills under the company name
• Bank statements in the previous year/six months
• Partner, director, and company-owned assets
• Any Office or Shop Tenancy Agreements
How Can You Improve Your Chances of Business Loan Approval?
If your business is doing poorly, it’s not a fate set in stone. You can still change your credit history and lower your interest rates before your loan application.
Truthfully, any business with poor financial stability and problematic credit history will face difficulties during their working capital loan application. However, with a solid business plan and a 1-2 year drastic difference in financial management and performance, you’re highly likely to have lower interests than before for your target loan amount.
Just do the following to improve your scores and improve your financing options:
1. Submit All Required Documents
Ensuring you submit all the necessary documents is one of the main goals to receive approval for loans. We’ve listed the requirements for business loans above for you to follow
In reality, preparing and submitting all your documents will not impact your credit scores. However, you can receive your application results in the fastest possible time by submitting all the needed documentation quickly.
2. Resolve All Existing Debts
Banks and financial institutions look closely at your credit report, which indicates your risk grade, credit score, history, and other information. If the majority of partners or the brand itself has a low-risk grade and credit history, you’ll need to improve those aspects first before you take on additional financing.
Resolving all your existing debt can give you a better credit score immediately. Make sure to obtain credit reports a few weeks after you’ve paid off all your previous financings.
3. Consider Using Licensed Moneylenders for Business Loans
If you’re in a hurry to get the best start-up loan for your business, you can’t go wrong working with licensed moneylenders. They offer some of the best rates and do not consider credit scores when deciding on your loan application.
Truthfully, you’re applying for an unsecured start-up loan from licensed moneylenders. You’re likely to pay a higher yearly interest rate than other financing options available in the market. However, as long as you regularly pay, you won’t need to worry about penalty fees and other start-up loans.
4. From Newly Incorporated to Establishing Business
Financial institutions want to learn about your business’ performance and potential, which is why new businesses must thrive for a year until they become eligible for financing.
Newly-incorporated businesses lack data that lowers their risk value with banks and financial institutions. However, booming businesses have better chances of receiving financing approval.
5. Improving Business Performance
Even the best businesses might only break even or sustain losses year by year. Banks and financial institutions are highly likely to approve loans of banks with improved or recovered business performance.
Alternatively, other financial institutions offer loans that serve as an aid to help local brands recover during dire situations. For example, the SME Working Capital Loan’s purpose is to help businesses affected by the 2020 Covid-19 pandemic to stay afloat and continue their operations.
How to Find the Best Startup Business Loan in Singapore
Ensure that you’re working with a licensed moneylender in Singapore, such as Raffles Credit, to effectively fund your startup. Registering and applying for a loan with Raffles Credit is easy. Just visit our website today to learn more about what we can do for you.