Startup Business Loan For New Company
A new company can get a business loan in Singapore, but financing options are very limited during the first 1 to 2 years. Based on Linkflow Capital’s experience reviewing SME financing cases, conventional bank financing is generally not realistic for businesses under 6 months old.
Limited startup loan options are available from around 6 months, more banks may consider the business after 12 months, and access to meaningful loan quantum becomes much broader from around 2 years of operating history.
Business age is only one part of credit assessment. Banks will also consider factors such as revenue, cash flow and profitability amongst other credit parameters. For younger businesses with limited financial history, the business owner’s personal credit record can carry greater weight in banks' assessment.
Compare Startup Business Loan Options in Singapore
Business loan options for new companies in Singapore are much more limited than for established SMEs. Financing facilities available will depend heavily on how long the company has been operating, its revenue and cash flow, and the directors’ personal credit profiles.
Some financing products are specifically designed for younger companies, while conventional SME loans generally become more accessible only after the business establishes a longer operating track record.
| Financing option | Minimum business age | Maximum loan amount | Maximum tenure | Key points |
|---|---|---|---|---|
| OCBC Business First Loan | 6 months to under 2 years | Up to S$100,000 | Up to 5 years | Specifically designed for younger SMEs. Eligible businesses should generally have 30% local shareholding and fall within OCBC’s revenue criteria. |
| DBS Quick Finance | 6 months | Up to S$50,000 for new DBS borrowers | Up to 5 years | Fully digital application. No documents are required for new borrowers applying for up to S$50,000, although additional information may still be requested. |
| Funding Societies Start-Up Financing PRO | At least 6 months | Up to S$40,000 | 5 months | Higher-quantum startup financing, with pricing subject to credit assessment. |
| EFS SME Working Capital Loan | Subject to respective participating financial institution's criteria | Up to S$500,000 | Up to 5 years | Government-assisted working-capital scheme offered through participating financial institutions. It is not a dedicated startup loan, and each lender applies its own credit criteria. |
Important: Advertised maximum loan amounts should not be treated as the amount a new business is likely to qualify for. In practice, younger businesses are usually offered much lower loan amounts because they have limited operating and cash-flow history.
Based on our experience, businesses aged 6 to under 12 months should generally not expect more than S$50,000 in financing, if eligible. From 12 months onwards, stronger businesses with healthy revenue and cash flow may qualify for approximately between S$100,000 up to S$200,000, with higher amounts possible only for stronger credit profiles.
Different banks have different minimum business age criteria. SMEs can compare all financing options easily via a business loan comparison portal at smeloan.sg.
What Business Loans Are Available Based on Company Age?
Business loan options generally increase as a company builds a longer operating and financial track record. Based on Linkflow Capital’s experience, conventional bank financing is generally not realistic for businesses below 6 months of operation.
Some limited options begin to emerge from 6–12 months, more banks may consider the business after 12 months, and around 2 years is typically the point where obtaining a meaningful loan amount becomes much more realistic. From the 3rd year onwards, practically all banks’ options are available.
Business age alone does not determine credit approval. Revenue, cash flow, profitability, existing borrowings, industry nature and the directors’ credit profiles remain important credit underwriting factors. An experienced SME loan consultant can help advise the most realistic financing route.
| Business age | Practical financing outlook |
|---|---|
| Under 6 months | Conventional bank business financing is generally not realistic because the company has insufficient operating, revenue and cash-flow history for banks to assess. |
| 6 to under 12 months | Financing options remain very limited. A small number of startup-focused products may be available, but approved loan amounts are generally modest. |
| 12 to under 24 months | Some banks may begin reviewing the business, particularly where revenue and cash flow are healthy. Options and loan quantum are still more limited than for established SMEs. |
| 24 to under 36 months | Most mainstream bank options begin to open up. In our experience, around 2 years is the most realistic point for a business to start securing more meaningful loan quantum, subject to its overall credit profile. |
| 36 months and above | Practically all mainstream business-loan options may be considered, assuming the company meets the bank's other credit criteria. |
Prior Industry Experience Can Strengthen a Young Company's Application
A younger company may sometimes receive stronger consideration if its key person has substantial prior experience in the same industry.
In Linkflow Capital’s experience, if the key person of a younger business has relevant industry management experience of more than 5 years, this could be a mitigating factor banks would consider favourably.
For context, relevant management experience should be supported by the director’s ACRA appointment history in an older related company with a similar principal business activity to the younger applicant company.
What Documents Are Required for a Startup Business Loan?
The documents required for a startup business loan depend on the bank and how long the company has been operating. For younger businesses, the documents required are typically lesser than an older, more established SME.
Banks are aware there is not much historical information such as accounting financial reports a younger startup can provide. Some banks even offer fully digital, no-documents application route for their startup financing products.
- Typical minimum documentations required are:
- Latest 6 months' business bank statements
- Directors’ latest Notice of Assessment
Supporting documents for major contracts, invoices or customer orders if available, help strengthen the case.
Can I Get a Loan to Start a New Business?
If your business has not started operating and generated revenue yet, it is generally not possible to obtain a conventional business loan from a bank. Banks typically assess business loans based on historical revenue, cash flow and repayment capacity, which a new business that has yet to commence operations does not have.
This is different from financing a newly established business that has already been trading for several months. Once a company develops an operating history and generates revenue, limited startup financing options may become available.
Aspiring entrepreneurs who need startup capital may therefore need to consider other sources of funding such as banks’ personal loans, shareholder capital, equity investment or government grants where applicable.
Conventional business loans are generally intended for businesses that already have some operating track record.
Government funding to start business
The Singapore government is supportive of encouraging local entrepreneurship and supporting growth of domestic SMEs. There are government assisted financing schemes that small businesses can tap into. The SME Working Capital Loan, part of the Enterprise Financing Scheme, is a popular financing facility for SMEs.
However, these government business loans which are facilitated by commercial financial institutions and banks are mainly catered for operational SMEs with minimally one year of operational history.
For innovative and scalable technology startups, government supported schemes and grants for startups that could be tapped into are the Startup SG Tech scheme or the Startup SG Founder programme. All other SMEs could also consider tapping into the Productivity Solutions Grant (PSG) with up to 50% funding support on pre-scoped solutions.
These grants and startup funding aim to spur tech entrepreneurship and catalyze the growth of innovative startups based on proprietary technology and scalable business model.
Alternative options
Most banks deem the risk of failure is too high for new start ups. For entrepreneurs targeting to get a loan to start a business, do consider other funding channels instead.
Personal loans for business startup
Personal loans from banks is a viable option to consider when exploring getting a loan to start a business. The liability risk is somewhat similar to a typical SME loan since business owners have to furnish personal guarantee as well for all unsecured business loans.
Most banks can only extend up to 4 times your monthly income for personal loans. So do expect smaller loan quantum for a start as compared to business loans. A higher consolidated loan amount could be raised by applying with more banks concurrently but take note of regulatory guideline on maximum personal loans cap across all banks, and personal leverage risk.
Alternative financiers
Aside from traditional mainstream banks and financial institutions, there are also non-bank alternative financiers that offer SME loans. Their credit criteria might be less stringent than banks. But correspondingly, do expect less favorable terms than banks. Interest rates are typically higher than bank loans, and quantum is smaller.
Alternative financiers include MAS regulated P2P funding platform such as Funding Societies. Digital payment providers such as Instarem (NIUM) also offers business payments through the business owner's personal credit cards, which is another innovative short-term financing solution.
Most of these alternative financiers can only finance private limited entities and does not extend sole proprietorship business loan. This is likely due to regulations on the Money Lending Act.
Mortgage financing
For new companies that are unable to avail of bank loan for startup business, consider property financing if the business owner owns a private property. Property can be pledged to banks for financing, if the loan-to-valuation ratio is not too high (i.e. below 60%) or if the property is fully paid for.
If there is an existing property loan, additional equity gear up loan can be unlocked, if loan-to-valuation value permits.
However, if the property is your primary residence, we do not advocate leveraging excessively on mortgage financing to fund your business ventures.
Equity financing
For tech startups with potential to scale, equity financing such as angel investors, venture capital or private equity funds are also suitable sources of startup capital.
In our local Singapore context, if you're a tech startup and already backed by VCs or have raised prior equity rounds, you can consider Venture Debt Financing as well. Venture loan does not further dilute your equity and provides an alternative channel of financing. Convertible notes with warrant options are also financing options niche lenders potentially offer.
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