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Guides to business loans in Singapore

If you are a small and medium-sized enterprise in (SME) owner in Singapore, you are likely to seek financial assistance at one point in time.

Business loan sg can either be used for capital investment, to boost working capital, pay rent, or other purchases.

This guide enlightens SMEs on the available options for boosting their businesses through business loans in Singapore.

Types of Business Loan Available in Singapore

Government Assisted Business Loan Scheme

This is a working capital loan and temporary bridging loan program. This scheme was introduced in 2020 during the height of the COVID-19 pandemic as a way for the government to support enterprises in Singapore that were already feeling the hit of the pandemic.

The loans are administered by Enterprise Singapore (ESG) and their participating financial institution (PFIs)

They are very attractive to SMEs as they include a government risk share of up to 90%. They offer 3 loan facilities: SME working capital, trade loan, and a temporary bridging loan program.

 Unsecured Business Term Loan

Unsecured business term loans are not secured by physical collateral such as property or equipment, but by company directors’ personal guarantees

These loans are very popular among SMEs due to their flexibility. They can be used to finance working capital for daily operations such as the purchase of inventory and payroll or to finance business expansion plans such as leasing a new retail outlet.

Merchant Advance

Merchant advance (MCA) is a financing product that is only available to retail or F&B businesses that use credit card terminals.

Qualification criteria are based on 6 months of credit card transactions. If you request huge amounts, then you’ll be required to provide your financials and guarantors.

Invoice Financing

Invoice financing in Singapore refers to a credit facility that uses invoices as collateral. The amount to advance is based on the strength of the SMEs customers.

Government or Multinational corporations (MNC) customers are usually the most preferred customers as their payments are always guaranteed.

The SMEs receive business loan sg by providing the invoices that are awaiting payment. Then, the lending institutions will process the loan and use the invoice as collateral of which they’ll recover their money plus interest once the invoice amount is settled mostly in a month’s time.

Business Overdraft

An unsecured overdraft is viewed as an alternative to a business tern loan and is recommended for SMEs who require short-term financing for working capital.

Unlike the term loan, Overdraft provides the SME with a line of credit instead of a lumpsum amount. Interest is only charged on the amount used. The overdraft facility allows the SME to have multiple withdrawals of any amount up to the credit limit.

Business First Loan

This is an unsecured business loan sg that caters to young start-up registered and has been operating in Singapore for 6 months to 2 years

It is one of the few loans available in Singapore for business start-ups

With the above information in mind, the next step is to look for a reputable lender and apply for a loan.

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