Small and medium-sized enterprises (SMEs) in Singapore are crucial to the growth and development of the country’s economy. However, many SMEs may face cash flow problems, especially during difficult times, and may require loans to keep their businesses afloat. In this guide, we will cover the various types of corporate loans available in Singapore and what SMEs can do if they do not qualify for an SME loan.
Business Loan Options in Singapore
There are many types of business loans available to SMEs in Singapore. Some are offered for general business needs, such as managing cash flow or furthering growth, while others are specifically designed for certain business needs, such as machinery/equipment or property loans. Here are some common types of business loans:
Standard Business Loan
The standard business loan is an unsecured loan that allows businesses to borrow a certain amount of money for a set repayment term of up to five years. Most major banks, such as DBS, OCBC, and UOB, offer this type of loan to local businesses. However, there may be certain requirements, such as how long your business has been around and how much revenue it generates.
SME Working Capital Loan
The SME Working Capital Loan is a special type of business loan that is offered to local SMEs with a maximum of 200 employees. The Singapore government works with banks to offer financing of up to $1 million per borrower, to be repaid within 1 to 5 years. The SME Working Capital Loan is available to Singapore-registered SMEs that are at least 30% owned by Singaporeans or PRs.
Temporary Bridging Loan
The Temporary Bridging Loan is another government-backed business financing scheme that helps tide all businesses (not just SMEs) over the Covid-19 outbreak. This loan is open to Singapore-registered companies that are at least 30% owned by locals, and the loan amount can be up to $5 million, with a repayment period of up to 5 years.
Startup Business Loan
The startup business loan is designed for new businesses and is a mini version of the regular business loan, offering a smaller cap of up to $100,000. It is easier to get a startup business loan, as businesses only need to be in operation for a few months and do not require a strong financial history to borrow.
Reasons for Unsuccessful Business Loans
While there are many types of business loans available to SMEs in Singapore, some loan applications may still be unsuccessful. Here are some reasons why your business loan application may not be approved:
Getting a business loan can be difficult for new businesses as most providers require businesses to be around for at least 6 months to qualify. Even if a business is established, providers may require proof of annual revenue to lend money.
Government-assisted financing is only open to businesses registered in Singapore that are at least 30% owned by Singaporeans or PRs. Businesses without enough Singaporean or PR shareholders may find it difficult to secure a business loan.
Business loan providers may deny loans to businesses with a poor credit score. A low credit score causes banks to doubt a business’s ability to repay its loan, and even personal credit scores can impact business loan results.
In conclusion, SMEs in Singapore have several business loan options available to them, ranging from standard business loans to government-assisted financing schemes. However, businesses must meet certain requirements to qualify for these loans, such as having a good track record, meeting business ownership criteria, and having a good credit score. SMEs should carefully consider their options and eligibility before applying for a business loan to avoid disappointment and unnecessary debt. If you’re feeling overwhelmed by all the different types of business loans available in Singapore and unsure which one is right for your business, don’t hesitate to reach out to a professional loan consultant. A loan consultant can offer you valuable insights into the loan application process, and help you navigate the various options available to find the best fit for your business needs. We offer a free consultation, so take advantage of this opportunity to speak to an expert and get the guidance you need to secure the right business loan for your company.