Having a business loan serves as the lifeblood of a business, providing the necessary funds to start, operate, expand, and innovate. It helps small businesses navigate challenges, seize opportunities, and achieve long-term sustainability and success.
However, some SMEs might find it difficult to secure business loans from traditional banks due to the lack of credit information, as well as the companies’ perceived riskiness. Additionally, it might get confusing to some business owners when it comes to comparing certain terms, such as the business loan interest rate, in the loan agreement. Here, we have a comparison guide to all the best SME and startup business loans available in Singapore to ease your troubles.
What Are The Basic Requirements To Apply For Business Loan in Singapore?
There are some basic requirements to apply for a SME business loan and other Singapore government financing under the Enterprise Financing Scheme.
- Ownership or local shareholding: Minimum 30% local shareholding held directly or indirectly by Singaporean(s) and/or Singapore PR(s)
- Incorporation of a SME: Business should be registered and operating in Singapore
- Annual sales/income: Depending on where you’re lending from, government-backed loans have a limit of $100 million annual sales generated. Some financial institutions require a minimum annual income of $20,000 or higher.
- Employment size: Group employment size differs when seeking funds from different financial institutions. For certain lenders, this is a non-issue.
- Operating duration: Your business should be operating for at least 6 months.
Traditional Bank Business Loan and Interest Rate
Traditional banks tend to put their applicants through a much more meticulous and longer assessment process to see if they are suitable to receive a business loan. Consequently, for those who don’t have a long-standing and good relationship with a traditional bank, obtaining any small business loans becomes challenging. Here are a few banks’ business loan and interest rates in Singapore to consider:
1. DBS SME Working Capital Loan
- 30% local shareholding
- Annual group sales below S$100 million OR group employment size less than 200
- Loan quantum from S$20,000 to S$500,000
- Loan tenure up to 5 years
- Indicative Interest Rate starts from 7.5%
- Processing fee of 0.75% for online applications
2. OCBC Business Term Loan
- Locally incorporated for at least 2 years
- 30% local shareholding
- Loan quantum of up to S$700,000
- Loan tenure up to 5 years
- Indicative Interest Rate starts from 7%
- Facility fee of 1.5% of the approved loan amount (min. $500)
Note: OCBC launched a Women Entrepreneurs Programme in March 2024 which will waive processing fees on loans of up to S$100,000 towards start-ups that are less than 2 years old and founded by women.
3. UOB Business Loan
- Registered and operating in Singapore for at least 1 year
- 30% local shareholding
- Annual group sales below S$100 million OR group employment size less than 200
- Loan quantum up to S$350,000
- Loan tenure up to 5 years
- Indicative Interest Rate from 7.75%
4. CIMB BizGrow
- Loan quantum up to S$400,000
- Loan tenure up to 5 years
- Indicative Interest Rate up to 9.88%
5. Standard Chartered Working Capital Loan
- Loan quantum up to S$500,000 per borrower OR S$5 million per borrower group
- Loan tenure from 1 year to 5 years
- Indicative interest rate from 9% p.a.
- Annual fee maximum 2% of approved loan amount (min $400), subsequent years $100 per year; additional interest at 3.5% p.a. above the interest rate levied on all overdue instalments
Digital Bank Business Loan and Interest Rate
Digital banks in Singapore refer to banks that primarily operate online and offer their services through digital platforms, mobile apps, and internet banking. These banks often do not have physical branches, allowing them to offer more streamlined and cost-effective services.
Explore business loan options and interest rates offered by the following digital banks:
1. ANEXT Business Loan
- Loan quantum from S$5000 to S$300,000
- Loan tenure from 1 year to 5 years
- Indicative interest rate from 6.8%
- One-time facility fee of 1% approved loan amount or S$200 (whichever higher); S$100 late fee and default interest (3x of your loan interest rate) charged on principal portion of overdue amount
2. GreenLink Digital Bank Micro Term Loan
- Loan quantum from S$10,000 to S$300,000
- Loan tenure up to 2 years
- Indicative interest rate from 5% p.a.
- Facility fee of 1% of credit limit granted; late fee of S$50 for every overdue instalment
3. Maribank Business Loan
- Business must be operating for at least 6 months
- 25% local shareholding
- Loan quantum up to S$200,000
- Loan tenure up to 12 months
- Simple interest rate at 0.5% per month, effective interest rate is dependent on loan quantum/tenure
- No processing or facility fees; late payments will incur 15% late interest charge
Government-Backed Business and Corporate Loan
The government offers a range of business grants and financing options under the Enterprise Financing Scheme (EFS) from Enterprise Singapore. At any growth stage, companies can take up these SME business loans to develop new products, expand their operations, and build on their capabilities.
One such financing option is the SME Working Capital Loan. Moreover, the government incurs a co-risk share of the borrowing amount. This makes lending less risky, and increases the chances of approval. Overall, these business grants support the growth and success of small businesses in Singapore.
- Maximum Loan Quantum of S$300,000 per borrower
- From 1 October 2022 to 31 March 2024: S$500,000 per borrower
- Maximum Repayment Period of 5 years
- 30% local equity held
- Group annual sales turnover not exceeding S$100 million or maximum of 200 employees
Non-Bank Alternative SME Lenders
Private lenders such as Poss Capital provide business loans for various reasons as they see fit for their investment. This is because they profit off the business loan interest rates of the money they lend you – that is their business model.
At Poss Capital, we understand that small and medium-sized enterprises (SMEs) face major challenges due to limited access to finance across different stages of a business cycle. Poss wants to bridge this financing gap for businesses that lack sufficient funding by providing them with an alternative source of capital.
- Up to S$100,000
- Up to 12 months Repayment Period
- Business Loan Interest rate from 1.2% per month
- Monthly Repayment
Grow Your Business With Poss Today
Getting a much-needed SME business loan from a private lender can be much more flexible than getting it from a traditional bank. At Poss Capital, we are here to provide you access to funds when you need them the most.
Apply TodayFAQs About SME Business Loan in Singapore
Yes, you can. While most financial institutions prefer to lend to companies that have been operating for at least 12 months, Poss Capital only requires 6 months operating history of your business bank account.
Banks usually take up to 1 month to assess your loan application while non-bank lenders can take up to 1 to 2 weeks. Poss Capital will review your application and get back to you within 24hours*.
*T&Cs apply.
You can secure up to S$100,000 via Quik unsecured business loan. Apply today and get a non-obligatory quote.
Common mistakes SMEs make when applying for a business loan include underestimating the loan amount, failing to provide sufficient documentation, and ignoring the terms and conditions of the loan agreement. It is important to assess your funding needs, gather all necessary documents and thoroughly understand the loan terms before signing.
Assess your business's financial situation, compare different loan options, and seek professional advice. Consider factors such as interest rates, repayment terms and fees offered by various lenders.
Most banks have an early repayment penalty of about 2-5%. Some non-bank lenders have a minimum loan period of 6 months and is without fee thereafter.
Poss Capital offers zero repayment fee or penalty. This means you will never be charged for paying off your business loan early!
