Best SME Business Loan Singapore
[2022] Compare All Banks

Maximum SME loan amount is typically between S$300K to S$500K for most banks. Loan quantum granted is dependent on business's revenue, current debt servicing ratio and credit profile.

As a very general rule of thumb, the maximum loan quantum a bank can extend to a particular SME is usually between 20% to 40% of the borrower's annual revenue. Different banks have varying credit policies on the maximum loan quantum they can grant. 

Most banks do not offer startup business loan. Your business must be minimally 6 to 12 months old to apply for financing. Even so, financing options and quantum are very limited for businesses less than 1 year old.

More commonly, banks will prefer at least 2 to 3 years of business history for reviewing applications. If the keyman of a relatively new business has at least 5 to 7 years of related industry experience managing another business in the same industry as an appointed director, this might help to mitigate the new business's lack of operating history.

Different banks require different list of documents. Some common documents that might be requested for include:

• ID copy of business owner
• Income tax Notice of Assessment (NOA) of business owner
• Credit bureau report of business owner
• Latest 6 months operating bank account statements of the business
• Latest 2 to 3 years financial reports or management accounts of the business
• Latest 4 quarters GST form F5 (if GST registered)
• Debtors and creditors ageing list, if applicable
• Recent awarded contracts, purchase orders, accepted quotations etc
• List of top 5 suppliers and customers (for B2B companies)
• Operating premise proof of address (utility or telco bill)
• Copy of operating license or professional certificate (for businesses in regulated industries that require licensing, certification or professional accreditation from relevant authorities)
• Memorandum and Articles of Association (for Pte Ltd entities)

Application usually takes 1 to 2 weeks to be processed once required documents are in order. For weaker or complicated cases, application could take up to 4 weeks. An experienced SME finance consultant might be able to help expedite applications and save on processing time.

• Business term loan: Lump sum unsecured loan disbursement, repaid over equal monthly term instalments, typically between 3 to 5 years. This is the most common form of financing instrument available for most SMEs.
• Trade financing: Revolving working capital credit line facility to finance purchases of inventory and supplies. Trade financing is suitable for businesses that have to stock or trade in physical inventory and goods. 
• Invoice financing/factoring: Short term credit facility to unlock cash in receivables. Useful for B2B businesses that sell to other companies on credit terms.
• Property financing: Mortgage loan to finance purchase of commercial or industrial properties. SMEs can also pledge current property to banks for financing facilities. Cheapest form of financing due to collateral nature.
• Equipment/machinery financing: To finance purchase of fixed assets such as machinery and equipment. Typically structured as hire purchase or finance lease.
• Government financing schemes: Government assisted SME loans such as the Enterprise Financing Scheme and SME Working Capital Loan. These schemes typically bear lower interest rate than banks’ commercial term loans due to risk sharing mechanism by the government and are typically facilitated by Enterprise Singapore.

There are multiple credit criteria in banks’ credit assessment and underwriting. These are not made public and differs from each bank. Common factors that banks evaluate on include:

• Age of business: At least 6 months to 1 year old but most banks will prefer minimum 2 to 3 years.
• Business industry: Different banks might have different outlook on the same industry. The industry you are in could be deemed favorable to some banks, but might be classified as high risk to other banks.
• Sales revenue turnover: Most banks require applicants to have at least a bare minimum annual revenue of $200K. However, many banks do set a higher benchmark and common minimum revenue requirement could be up to $700K to $1M per year for some banks.
• Bank statements: Almost all banks will assess the latest 6 months operating bank statements of applicant company. Figures that are taken into consideration include average daily balances maintained, month end balances, any excess or overdrawn account due to insufficient funds, total crediting amount per month and cash flow volatility. In general, the higher the better for average cash floats maintained and total crediting amount. Most banks typically require a minimum of $10K average daily balances maintained in the latest 6 months bank statements.
• Credit score: The business owner’s personal credit score is a critical component in banks’ credit evaluation. Most banks will not be able to finance companies where the keyman has a credit bureau score of HH, the worst grade. Past adverse defaults, recent discharged bankruptcies and multiple late payment records on current personal credit facilities are all flagged out as rejection causes.
• Financial performance: Financial figures that are commonly assessed include profitability, net profit margin, gearing ratio, inventory cycle and working capital cash flow. Most banks will require the business to be profitable and with positive equity in the last financial year.

Yes, personal guarantee is required. By default, the managing director and majority shareholder will be required to provide their personal guarantee for company loan applications.

Some banks might also request for shareholders with significant shareholdings (i.e. >30%) to provide personal guarantee, even if they are not appointed as directors.

In certain situations where the keyman of the business has a weak credit score, banks might also require third party guarantors provide additional guarantees.