Types of Business Loans for SMEs in Singapore

Based on reports, Small and Medium-sized Enterprises (SMEs) account for nearly half of the total gross domestic product (GDP) in Southeast Asia. Local businesses’ contribution is a big factor for Singapore’s economic success. Loans for startups in Singapore are essential as this will give businesses financial assistance to grow.

You must be interested now to know more about the business loans that are available to SMEs in Singapore, read on to find out more.

Here are some  types of SME business loans:

  1. Standard Business Loan

The standard loan is a secured loan (this form of loan depends on your credibility and worthiness to pay and requires a collateral to be placed as a guarantee ). You will be given options for the terms to repay up to 5 years.

  1. Startup Business Loan

It is another version of the regular business loan. The difference is that a  startup loan offer is small. It is also known as “first business loan”. This loan does not require a business to demonstrate a strong financial  background to be eligible .

  1. SME Working Capital Loan

A Working Capital Loan is one that is availed of to fund the day-to-day operations of a business, ranging from payment of employees’ wages to covering accounts payable. Not all businesses see regular sales or revenue throughout the year, and sometimes the need for capital to keep the operations going may arise.

  1. Temporary Bridging Loan

The Temporary Bridging Loan is a government-backed loan program launched in March 2020 to aid businesses in weathering the COVID-19 storm. This new business loan is not only limited to SMEs but it is also open to Singapore-registered businesses that are at least 30% locally owned. This decision gave companies the security and certainty that they would be able to obtain low-cost working capital to help them with their cash flow problems.

Eligibility Criteria

Common evaluation criteria includes  incorporation in Singapore, actively operating for 2 years, meeting the required revenue standards, 30% of the business must be owned by a Singaporean/PR.

Documents required to apply for Business loans.

Here are the 5 important documents you need to secure to submit your application.

  1. Credit Bureau Singapore (CBS)

Business directors of the company will need to provide their latest Credit Bureau (CBS) report.The purpose is to enable the lenders to view the company directors existing loans, financial histories etc.

  1. Business/company Financial Statement

The business needs to provide a set of document records that covers  the financial activities of the company in the last 2 years of operation. To assess the company’s financial historical performance, a copy of the latest 2 years of Profit & Loss statements  and  Balance Sheets needs to be provided.

  1. Accounting and Corporate Regulatory Authority (ACRA) Business Profile Information

Registering in Business Profile (ACRA) gives you the advantages of allowing your business to be verified and easy to search in public. Your company’s business profile information on the Accounting and Corporate Regulatory Authority (ACRA) is a document that shows your business information, directors and shareholders, as well as your company’s paid-up capital. With ACRA, financiers are able to identify the company’s directors, understand the type of business you are operating and ascertain who to bring in as a guarantor if needed.

  1. Bank Statements

The business will need to provide bank statements from the last 6 months Financiers will review the company revenue,expenses and balance to assess if the company will have sufficient funds to repay the loan. It also indicates the cash flow of your business.

  1. Notice of Assessment (NOA)

Business directors of the company will be asked to provide their NOA report from the last 2 years. Tax assessment is an important factor to identify the eligibility of the borrower. This will determine the eventual loan amount. These are documents issued by the Inland Revenue Authority of Singapore (IRAS).

SMEs have to deal with a lot of challenges when it comes to building and running businesses. There are complexities involved when establishing a business that many may not be aware of. One important requirement is having a Bank account that offers services that will help you manage the cash flow, monitor your day-to-day financial activity and ease your daily banking.

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