Your Most Complete Guide
to
Applying for SME Business Loans in Singapore.

Owning a small business or SME (small and medium-sized enterprises) is never easy and it is especially difficult in the economic environment today.

Among the most common issues small business owners face is also one of the most serious–cash flow.

If you are a business owner experiencing cash flow problems, it is time for you to consider the advantages of small business loans.

Business owners can get a small business loan online to help with cash flow problems and keep their heads above water when times are tough.

Low-rate business loans may also be used for a capital injection to start a business. Many successful entrepreneurs start with small business loans with low interest rates to overcome their initial lack of capital.

This comprehensive SME business loan guide will help you to find a business loan that is right for you

Your Most
Complete Guide to
Applying for SME
Business Loans
in Singapore.

Your Most Complete Guide to Applying for SME Business Loans in Singapore.

Owning a small business or SME (small and medium-sized enterprises) is never easy and it is especially difficult in the economic environment today.

Among the most common issues small business owners face is also one of the most serious–cash flow.

If you are a business owner experiencing cash flow problems, it is time for you to consider the advantages of small business loans.

Business owners can get a small business loan online to help with cash flow problems and keep their heads above water when times are tough.

Low-rate business loans may also be used for a capital injection to start a business. Many successful entrepreneurs start with small business loans with low interest rates to overcome their initial lack of capital.

This comprehensive SME business loan guide will help you to find a business loan that is right for you

Table of Contents

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Table of content

What is an SME business loan or SME working capital loan?

SME Business Loan

A type of business loan given to SMEs to start a new business or sustain an existing one.

SME Working Capital Loan

An unsecured loan, but it is meant specifically for short-term SME operational expenses.

How can I get a small business loan in Singapore?

In Singapore, you have three main options:

Banks

*some also offer government-backed schemes

Licensed moneylenders
Other financial institutions

Let’s delve into more details.

What can you use small business loans for?

A business loan in Singapore is one of the most versatile loans you can get.
How they are used generally falls in two categories:
• starting a business and
• sustaining a business

thinking small business
Loan for Business Startup in Singapore

Launching a business involves a huge investment of time, effort, and, perhaps most crucially, money. The bulk of the expenses that can be met by startup business loans fall into these categories:

  • Staffing – Hiring a team
  • Premises – Rental or purchase of an office and/or warehouse and/or factory
  • Equipment – Machinery, tools, and other assets essential to the business
  • Administrative costs – Licenses, permits, registration, certification, etc. from the government and regulatory bodies
  • Stock or raw materials 
Loan for an Existing Business in Singapore

For most businesses, their initial launch is the most expensive stage. However, ongoing expenses can also skyrocket, especially when the economy is doing poorly.

An SME working capital loan can function as a stop-gap measure when there are cash flow issues, for example, when you have to pay suppliers but your customers haven’t paid you. It also solve these issues by covering:

  • Salaries – Your own and your team’s wages
  • Rent or mortgage – To continue operating in your current business premises
  • Loans – To pay loan instalments for other business loans
  • Business activities – research & development, new equipment and machinery, training, sales, and marketing

Where can you get startup business loans and SME business loans in Singapore with low interest rates?

Every entrepreneur wants the best business loans with low interest rates, but it can be a challenge to find the right one. Currently, business owners in Singapore have six viable funding options for fast unsecured business loans. 

Government-assisted loans

Our government has always been very supportive of small businesses and that is evident from its range of services for SMEs. There are seven financial schemes under the umbrella of the Enterprise Finance Scheme (EFS) currently available to eligible businesses.

These loans are not directly negotiated with any government agency, but are instead available through banks and other financial institutions certified by the government as Participating Financial Institutions (PFIs).

However, assistance comes in the form of the government acting as a partial guarantor, shouldering between 50% and 70% of the risk-share. This is an incentive for banks to approve more working capital loans with bad credit.

EFS loans are available to all businesses based in Singapore that are at least 30% owned by Singaporeans and PRs. There is  enhanced support for ‘young businesses’, defined as those operating for five years or less.

Interest rates: SME working capital loan interest rates are usually capped at 5% (depending on the financial institution)
Loan tenure Up to 5 years
Late interests/ late fees 22% to 26.9% interest on outstanding amount; fees from $60 to $80
Processing fees 1% to 3% of loan principal (usually capped at around $200-$500)
Early redemption fees Around $150 or 3% of the outstanding principal, whichever is higher
Average loan amount you can take $300,000 per borrower
Other loan terms Maximum company revenue of $100 million or a maximum of 200 employees
Can business owners pledge private property to get a higher loan? No, EFS loans are unsecured

Digital financing platforms

Digital financing platforms

Digital financing platforms fill the gap between large financial institutions – such as banks, and licensed moneylenders. They have a quicker and more streamlined process than the former and access to greater loan amounts than the latter. However, they are also strictly regulated by the Monetary Authority of Singapore (MAS).

Companies like ValidusMoolahSense, and Aspire have taken the lead in this relatively new niche. They generally take a laid back approach to eligibility if you can show that you are registered with ACRA.

Another advantage of using these platforms is that they also act as a networking node, bringing in investors who want to finance companies that inspire them by becoming their angel investors. The flip side is that business owners, like yourself, may have to give up a stake in your company if you want an angel investor. These platforms offer both secured and unsecured loans.

Interest rates: varies, up to 20% per annum
Loan tenure 3 months to 2 years
Late interests/ late fees Varies depending on the platform at the institution’s discretion
Processing fees 1% to 5% of loan principal (usually capped at around $200)
Early redemption fees up to $1,000 (some have no charges)
Average loan amount you can take up to $5 million
Other loan terms Minimum revenue ($100,000-$500,000) and operational period (2 – 3 years)
Can business owners pledge private property to get a higher loan? Yes

Banks

Banks

Banks have always been the stalwarts of business finance. Despite the recent surge in the number of financing alternatives, they remain the most respected and reliable option. With that long history and prestige, though, comes a higher cost. This is evident from the relatively high interest and fees.

Many SME owners who want a low-interest-rate business loan will opt for government-assisted loans (EFS) through banks. However, banks also have their own SME loan packages. If you’re eligible for both EFS and new business loans direct from your bank, choose the direct route if you prefer premium service and are willing to pay for it.

Loan interest rates: 3.5% to 11% p.a. (effective interest rate of 6.5% to 24%).
Loan tenure 1 to 5 years
Late interests/ late fees 22% to 26.9% interest on outstanding amount; fees from $60 to $80
Processing fees 1% to 3% of loan principal (usually capped at around $500)
Early redemption fees around $150 or 2.5% to 6.88% of the principal amount redeemed early, whichever is higher
Average loan amount you can take $50,000 to $500,000
Other loan terms Minimum company revenue of $300,000 – $500,000 and operational period (2 – 3 years); may require guarantors
Can business owners pledge private property to get a higher loan? Yes

Licensed moneylenders

Licensed moneylenders

Licensed moneylenders have become a robust and widely-respected part of the financial services community. That itself is a testament to the hard work and deliberate efforts of licensed lenders who have had to battle the Ah Long stigma that has unfairly been attached to them.

These lenders cater to the widest array of applicants living in Singapore because they rarely have restrictions on citizenship and residency status. However, borrowers have to contend with a higher interest rate of 1% to 4% per month. If you can put up with that and need money in a hurry, licensed moneylenders can often be the best option.

Loan interest rates: 1% to 4% per month
Loan tenure Up to 12 months
Late interests/ late fees interest capped at 4% per month; fees capped at $60 per month
Processing fees capped at 10% of loan principal
Early redemption fees Not allowed
Average loan amount you can take $500 for those earning less than $10,000 a year; $3,000 for those earning $10,000 to $20,000 a year; and 6 times monthly income for those earning over $20,000 a year
Other loan terms business registered with ACRA, have been in operation for the past 6 months, and have a director who is a Singaporean/ Singapore PR, or a foreigner residing in Singapore.
Can business owners pledge private property to get a higher loan? Yes
licensedmoneylend_banner

Prosper Credit is an established licensed moneylender that offers affordable business loans.

Get a business loan with us here

Crowdfunding platforms

Crowdfunding platforms

The term ‘crowdfunding’ is self-descriptive – getting funds from random people. P2P (peer-to-peer lending) in crowdfunding gives money to a business in the form of a short-term loan to be paid back to the investors at a predetermined rate of interest. Payments are usually deferred for several months to allow the injection of capital to have its desired effect.

The Singapore crowdfunding scene is dominated by a small number of crowdfunding platforms, including Funding Societies and FundedHere.

Loan interest rates: from 0.8% per month
Loan tenure 1 to 12 months
Late interests/ late fees some charge 0.1% of the outstanding principal per day
Processing fees 3% to 7% of loan principal
Early redemption fees depends on loan, no charges for some
Average loan amount you can take $5,000 to $5 million
Other loan terms Minimum revenue $300,000 onwards and operational period 2 – 3 years
Can business owners pledge private property to get a higher loan? Yes, up to 80% of property value

Private financial institutions

Private financial institutions

Any private company may give another company a business loan. In Singapore, private businesses that extend loans to other businesses in the form of B2B loans do not require a separate license to operate.

Transport stalwart Grab has started GrabFinance for this purpose. Other major players in this category are Goldbell Financial Services and Capitall. These companies are currently not on the list of top business loan providers, but they provide a range of attractive financing options for both new (at least 6 months old) and ongoing businesses. Some are open to financing promising business ideas too.

They may offer repayment flexibility in the form of weekly, bi-weekly, and monthly instalments.

Loan interest rates: from 0.9% to 7% per month
Loan tenure 2 to 12 months
Late interests/ late fees Twice the monthly interest rate
Processing fees 5-10% of loan principal
Early redemption fees Yes, for some
Average loan amount you can take $10,000 to $500,000
Other loan terms Revenue $100,000 to $500,000, staff less than 200, and operational period 6 months onwards
Can business owners pledge private property to get a higher loan? Depends on the institution

Government-assisted loans

Our government has always been very supportive of small businesses and that is evident from its range of services for SMEs. There are seven financial schemes under the umbrella of the Enterprise Finance Scheme (EFS) currently available to eligible businesses.

These loans are not directly negotiated with any government agency, but are instead available through banks and other financial institutions certified by the government as Participating Financial Institutions (PFIs).

However, assistance comes in the form of the government acting as a partial guarantor, shouldering between 50% and 70% of the risk-share. This is an incentive for banks to approve more working capital loans with bad credit.

EFS loans are available to all businesses based in Singapore that are at least 30% owned by Singaporeans and PRs. There is  enhanced support for ‘young businesses’, defined as those operating for five years or less.

Interest rates: SME working capital loan interest rates are usually capped at 5% (depending on the financial institution)
Loan tenure Up to 5 years
Late interests/ late fees 22% to 26.9% interest on outstanding amount; fees from $60 to $80
Processing fees 1% to 3% of loan principal (usually capped at around $200-$500)
Early redemption fees Around $150 or 3% of the outstanding principal, whichever is higher
Average loan amount you can take $300,000 per borrower
Other loan terms Maximum company revenue of $100 million or a maximum of 200 employees
Can business owners pledge private property to get a higher loan? No, EFS loans are unsecured

Digital financing platforms

Digital financing platforms

Digital financing platforms fill the gap between large financial institutions – such as banks, and licensed moneylenders. They have a quicker and more streamlined process than the former and access to greater loan amounts than the latter. However, they are also strictly regulated by the Monetary Authority of Singapore (MAS).

Companies like ValidusMoolahSense, and Aspire have taken the lead in this relatively new niche. They generally take a laid back approach to eligibility if you can show that you are registered with ACRA.

Another advantage of using these platforms is that they also act as a networking node, bringing in investors who want to finance companies that inspire them by becoming their angel investors. The flip side is that business owners, like yourself, may have to give up a stake in your company if you want an angel investor. These platforms offer both secured and unsecured loans.

Interest rates: varies, up to 20% per annum
Loan tenure 3 months to 2 years
Late interests/ late fees Varies depending on the platform at the institution’s discretion
Processing fees 1% to 5% of loan principal (usually capped at around $200)
Early redemption fees up to $1,000 (some have no charges)
Average loan amount you can take up to $5 million
Other loan terms Minimum revenue ($100,000-$500,000) and operational period (2 – 3 years)
Can business owners pledge private property to get a higher loan? Yes

Banks

Banks

Banks have always been the stalwarts of business finance. Despite the recent surge in the number of financing alternatives, they remain the most respected and reliable option. With that long history and prestige, though, comes a higher cost. This is evident from the relatively high interest and fees.

Many SME owners who want a low-interest-rate business loan will opt for government-assisted loans (EFS) through banks. However, banks also have their own SME loan packages. If you’re eligible for both EFS and new business loans direct from your bank, choose the direct route if you prefer premium service and are willing to pay for it.

Loan interest rates: 3.5% to 11% p.a. (effective interest rate of 6.5% to 24%).
Loan tenure 1 to 5 years
Late interests/ late fees 22% to 26.9% interest on outstanding amount; fees from $60 to $80
Processing fees 1% to 3% of loan principal (usually capped at around $500)
Early redemption fees around $150 or 2.5% to 6.88% of the principal amount redeemed early, whichever is higher
Average loan amount you can take $50,000 to $500,000
Other loan terms Minimum company revenue of $300,000 – $500,000 and operational period (2 – 3 years); may require guarantors
Can business owners pledge private property to get a higher loan? Yes

Licensed moneylenders

Licensed moneylenders

Licensed moneylenders have become a robust and widely-respected part of the financial services community. That itself is a testament to the hard work and deliberate efforts of licensed lenders who have had to battle the Ah Long stigma that has unfairly been attached to them.

These lenders cater to the widest array of applicants living in Singapore because they rarely have restrictions on citizenship and residency status. However, borrowers have to contend with a higher interest rate of 1% to 4% per month. If you can put up with that and need money in a hurry, licensed moneylenders can often be the best option.

Loan interest rates: 1% to 4% per month
Loan tenure Up to 12 months
Late interests/ late fees interest capped at 4% per month; fees capped at $60 per month
Processing fees capped at 10% of loan principal
Early redemption fees Not allowed
Average loan amount you can take $500 for those earning less than $10,000 a year; $3,000 for those earning $10,000 to $20,000 a year; and 6 times monthly income for those earning over $20,000 a year
Other loan terms business registered with ACRA, have been in operation for the past 6 months, and have a director who is a Singaporean/ Singapore PR, or a foreigner residing in Singapore.
Can business owners pledge private property to get a higher loan? Yes
licensedmoneylend_banner

Prosper Credit is an established licensed moneylender that offers affordable business loans.

Get a business loan with us here

Crowdfunding platforms

Crowdfunding platforms

The term ‘crowdfunding’ is self-descriptive – getting funds from random people. P2P (peer-to-peer lending) in crowdfunding gives money to a business in the form of a short-term loan to be paid back to the investors at a predetermined rate of interest. Payments are usually deferred for several months to allow the injection of capital to have its desired effect.

The Singapore crowdfunding scene is dominated by a small number of crowdfunding platforms, including Funding Societies and FundedHere.

Loan interest rates: from 0.8% per month
Loan tenure 1 to 12 months
Late interests/ late fees some charge 0.1% of the outstanding principal per day
Processing fees 3% to 7% of loan principal
Early redemption fees depends on loan, no charges for some
Average loan amount you can take $5,000 to $5 million
Other loan terms Minimum revenue $300,000 onwards and operational period 2 – 3 years
Can business owners pledge private property to get a higher loan? Yes, up to 80% of property value

Private financial institutions

Private financial institutions

Any private company may give another company a business loan. In Singapore, private businesses that extend loans to other businesses in the form of B2B loans do not require a separate license to operate.

Transport stalwart Grab has started GrabFinance for this purpose. Other major players in this category are Goldbell Financial Services and Capitall. These companies are currently not on the list of top business loan providers, but they provide a range of attractive financing options for both new (at least 6 months old) and ongoing businesses. Some are open to financing promising business ideas too.

They may offer repayment flexibility in the form of weekly, bi-weekly, and monthly instalments.

Loan interest rates: from 0.9% to 7% per month
Loan tenure 2 to 12 months
Late interests/ late fees Twice the monthly interest rate
Processing fees 5-10% of loan principal
Early redemption fees Yes, for some
Average loan amount you can take $10,000 to $500,000
Other loan terms Revenue $100,000 to $500,000, staff less than 200, and operational period 6 months onwards
Can business owners pledge private property to get a higher loan? Depends on the institution

Compare loan terms across
different financial institutions.

Compare loan terms across
different financial institutions.

Apply for business loan

Searching for an affordable business loan?

Apply for a business loan with
Prosper Credit

What are the eligibility criteria for SME working capital loans?

Here’s a summary of the eligibility criteria for different types of lending platforms. Note that different lenders in the same category may have differing eligibility criteria. Check with each one before deciding on what works best for your small business.

Government-assisted loans
  • Business registered with ACRA
  • 1 Singaporean/PR director or a foreigner residing in Singapore
  • Min 30% Singaporean/PR ownership
Digital financing platforms
  • Business registered with ACRA,
  • Operating for at least 2-3 years
  • Minimum turnover 100K-500K
Banks
  • Business registered with ACRA,
  • Operating for at least 2-3 years
  • 1 Singaporean/PR director or a foreigner residing in Singapore
  • Min 30% Singaporean/PR ownership
  • May require guarantors or collateral
Licensed moneylenders
  • Business registered with ACRA
  • Operating for at least 6 months
  • Singaporean/Singapore PR director or a director who is a foreigner residing in Singapore
Crowdfunding platforms
  • Business registered in Singapore
  • Operating for at least 2 years
  • Minimum annual turnover of $300,000
  • Min. 30% Singaporean/PR ownership
Private institutions
  • Limited liability partnership or company
  • Operating for at least 6-10 months
  • Minimum turnover 100K, maximum 500M
  • Less than 200 staff
  • Min. 30% Singaporean/PR ownership

How to apply for a business loan?

How can you get a loan for new businesses? Here’s a summary of general application procedures. The exact procedures may differ between companies.

  1. Submit EFS e-form with supporting documents to PFI
  2. PFI assesses loan application
  3. PFI issues Letter of Offer
  4. Business accepts the offer
  5. Loan disbursed
  1. Apply online
  2. Application and document verification (usually 24-48 hours)
  3. Funds disbursed to the nominated account
  1. Submit an application online with supporting documents
  2. Bank assesses application and contacts guarantors, if any
  3. Bank extends a loan offer
  4. Loan disbursed (usually directly into a bank account)
  1. Apply online
  2. Loan officer contacts business owner
  3. Visit moneylender office with necessary documents and business pitch
  4. Sign loan contract
  5. Loan disbursed

     

Apply for a business loan with Prosper Credit now

  1. Pre-assessment and valuation with industry expert
  2. Campaign (around one month) by the platform to attract investors
  3. Direct pitches to groups of investors
  4. Investors send funds
  5. Business receives funds
  1. Contact the institution with a brief outline of the business plan and supporting documents
  2. Loan team review (usually within 24 hours)
  3. Meeting with the team to customise the best financing options
  4. Loans disbursed (possibly within 24 hours)

What are the documents needed?

For the average small business loan amount, you will generally need these six documents:

1
ACRA Business Profile Information

Accounting and Corporate Regulatory Authority (ACRA) issues a document that shows your business information, a list of directors and shareholders, and the company’s paid-up capital.

2
Notice of Assessment (NOA) of Directors

Company directors’ Notice of Assessment (NOA) for the last two years is usually needed to ascertain their income. This gives financiers an idea of the debt-to-income ratio of the directors.

1
ACRA Business Profile Information
Find out more

Accounting and Corporate Regulatory Authority (ACRA) issues a document that shows your business information, a list of directors and shareholders, and the company’s paid-up capital.

2
Notice of Assessment (NOA) of Directors
Find out more

Company directors’ Notice of Assessment (NOA) for the last two years is usually needed to ascertain their income. This gives financiers an idea of the debt-to-income ratio of the directors.

3
Credit Bureau Singapore (CBS) Report of Directors

Credit Bureau Singapore (CBS) report to show company directors’ repayment histories, outstanding debts, and outstanding unsecured loan amounts. This gives an idea of the borrower’s creditworthiness.

4
Company’s Financial Statements

Financiers use the company’s financial statements such as profit and loss statements and balance sheets to determine its historical performance. Most lenders require the latest two years of information.

3
Credit Bureau Singapore (CBS) Report of Directors
Find out more

Credit Bureau Singapore (CBS) report to show company directors’ repayment histories, outstanding debts, and outstanding unsecured loan amounts. This gives an idea of the borrower’s creditworthiness.

4
Company’s Financial Statements
Find out more

Financiers use the company’s financial statements such as profit and loss statements and balance sheets to determine its historical performance. Most lenders require the latest two years of information.

5
Latest Bank Statements

Bank statements reveal the company’s day-to-day bank activities and the balance at the end of the month. These figures indicate cash flow and whether the company has sufficient funds to repay a loan.

6
Accounts Receivables Aging List

The Accounts Receivables Aging List is an optional extra. It lists the business’s clients and outstanding payments receivable. It also lists debts and how long they have been overdue.

5
Latest Bank Statements
Find out more

Bank statements reveal the company’s day-to-day bank activities and the balance at the end of the month. These figures indicate cash flow and whether the company has sufficient funds to repay a loan.

6
Accounts Receivables Aging List
Find out more

The Accounts Receivables Aging List is an optional extra. It lists the business’s clients and outstanding payments receivable. It also lists debts and how long they have been overdue.

Looking for more information on taking a business loan with licensed moneylenders?

Looking for more information on taking
a business loan with licensed moneylenders?

Can I get a business loan with bad credit?

Some of you might ask – what if you (and/or your other directors) have a bad credit history? It is possible to get a business loan with bad credit, but the process may be longer and the terms of the loan may be less favourable.

Bank loans for businesses

Bigger lenders such as banks have especially stringent eligibility criteria. The main reason for this is that they are listed companies with obligations to their investors. If they expose themselves to greater financial risk in the form of bad debts, it may harm their share prices. As such, banks will summarily reject loan applications from anyone with bad credit.

The business startup loans with
licensed moneylenders
The business startup loans with licensed moneylenders

By contrast, licensed moneylenders are much more receptive to loan applications from applicants with bad credit. Each application is judged on a case-by-case basis, which gives them more room to adapt to individual cases.

However, the loan terms may be more severe – a higher rate of interest, shorter repayment period, increased payment frequency, and higher penalties for missed or late payments may apply.
The loan principal itself may be smaller to shield the lender from excessive potential bad debts.

How will bad credit affect your loan?

Bad credit is the biggest barrier that many aspiring entrepreneurs face. It can stall or completely derail otherwise profitable business ideas. Try to always avoid bad credit because it will burden you with these disadvantages:

loan approved

Loan Approval

All lenders, big and small, are less likely to lend money to someone with bad credit. Licensed lenders are slightly more lenient but most banks automatically reject applications from anyone with a poor credit history.

interest rate