Business Loans In Singapore Comparison
Business loans in Singapore are offered by almost 20+ banks and financial institutions.
Different banks have various criteria, rates and types of loans offered. You don’t have to call up every bank to check their rates and criteria:
Simply use this free online loan assessment tool to compare all SME business loans instantly!
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Types of small business loans:
1. Temporary Bridging Loan
The Temporary Bridging Loan Programme was introduced, and enhanced in Budget 2020, to help SMEs improve access to financing (up to $5M) and lower the cost of financing, in view of Covid-19’s impact on the economy.
2. Unsecured Business Term Loan
Most common form of working capital loan. Lump sum principal loan amount usually between $50K to $300K per bank. Repayable via equal monthly installments typically between 3 to 5 years.
3. SME Working Capital Loan
The SME Working Capital Loan is a government assisted financing scheme launched in June 2016. The scheme has been enhanced following Budget 2020, with maximum financing up to $1M for Singapore SMEs.
4. Trade Financing
Revolving trade financing credit line to finance inventories or materials purchases from suppliers. Letters of Credit (LC) can be issued to overseas suppliers. Trust Receipts (TR) credit terms between 90-120 days.
5. Factoring / Receivables Financing
Financier advance 80% to 90% of your customers’ outstanding invoices value. Suitable for SMEs whom serve reputable companies with long credit payment terms.
6. Property Financing
Mortgage loan to finance purchases of commercial or industrial properties. SMEs can also pledge exiting property to banks for financing facilities. Cheapest form of financing due to collateral nature.
7. Equipment Financing
To finance purchase of fixed assets such as machinery and equipment. Typically structured as hire purchase or leasing.
8. SME Micro Loan
The SME Micro Loan is for younger startups or smaller SMEs looking for micro financing up to $100K loan quantum. It has since been superseded by the SME Working Capital Loan.
Which Bank Gives Lowest Business Loan Interest Rate?
Different banks and corporate loan products bears different interest rate. A typical business term loan interest rate range between simple interest 3.5% to 7% p.a. (effective interest rate between 6.5% to 13%).
Use our business loan interest rate calculator to check indicative monthly installment amount and interest costs.
Typical business financing criteria and requirement:
Financing products, interest rates and credit criteria are different across all banks and financial institutions.
You can use a loan assessment tool to check your company’s eligibility and compare all banks business loan offerings.
Best bank for business loan in Singapore?
Most Singapore SMEs have a banking account with the 3 local banks due to their wide retail banking network and brand name familiarity.
The 3 local banks are undoubtedly dominant players in Singapore’s SME financing space. With strong branding and sturdy balance sheets, our 3 homegrown banks continue to dominate Asia’s safest banks rankings year after year.
DBS, OCBC & UOB are ranked the top 3 safest banks in Asia respectively for 2020. [1]
When it comes to applying for a business loan, most SMEs will naturally gravitate towards these 3 banks as well.
How attractive are the 3 local banks SME business loan offerings compared against each other?
We’ve done some research via mystery shopping calls to their respective SME loan departments and quick checks on their websites’ product page. Here are the results we got:
| Title |
DBS Business LoanDBS offers an unsecured business term loan for SMEs: |
OCBC Business LoanOCBC unsecured business term loan product features: |
UOB Business LoanUOB business term loan product is named Bizmoney Loan: |
|---|---|---|---|
| Maximum Loan amount | 500K | 500K | 350K |
| Maximum loan repayment period | 5 years | 5 years | 4 years |
| Interest rate | 10.88% p.a. | 10.88% p.a. | 10.88% p.a. |
| Processing fee | 2% of loan amount | 2% of loan amount | 2% of loan amount |
| Early redemption penalty | 2.5% | 5% | 6.88% |
Startup business loan in Singapore
If you’ve just established a new business and sourcing for a startup business loan in Singapore, you might be disappointed. There are limited banks offering unsecured business loan to new company with no operational track record.
Most banks require borrowers to have minimum 2 to 3 years operational history before considering a business loan application.
If your business is operational for at least 6 months to < 2 years with decent cash flow, a competent SME business loan consultant might be able to source alternative financing options for you. But be prepared that financing options are limited for a start.
Most banks deem the risk of failure is too high for brand new start ups. For entrepreneurs targeting to get a loan to start a business, you might like to search for other funding channels instead.
Personal loans from banks, personal savings or funds from friends and family are common sources of startup capital. If you are a tech startup with potential to scale fast, private equity financing, angel investors and venture capital are also appropriate channels.
Business loan with bad credit?
A common query some business owners have is if it’s possible to qualify for a corporate loan with bad credit history?
If the business owner has poor credit rating due to previous defaults or late payments on personal credit facilities, it will definitely affect the company’s financing approval chances as well.
If your credit rating score is low due to bad conduct payments of credit cards, car loan or home loan etc you might like to seek ways to improve your credit rating first before applying for business financing.
Depending on how adverse your credit history is, you might still be able to remedy it by clearing off all outstanding dues on your credit facilities. It is advisable to only apply for a business loan after you have sorted out your personal credit issues.
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