Best Business Loan Singapore
Looking for a small business loan?
You are probably here because you want to get a small business loan Singapore.
Well, look no further, you are in the right place:
We will help you to get the best business loans, at the best interest rates, to grow your business.
We guarantee you a fast and hassle-free process.
It gets better:
With Capable Loans, you get to compare all SME loans to find the best SME financing solution for your business.
As an honored guest on our website, we deeply appreciate your presence here…
…we want to ensure that the moments you spend here are worthwhile.
As you scroll down, you will encounter the following:
- A tonne of rich and insightful information on business loans in Singapore.
- A few nice pictures that we felt are nice to look at, and most importantly,
- A series of random but deeply meaningful quotes that we have placed around the website.
Types of Small Business Loans:
1. Unsecured Business Term Loan
The most traditional form of unsecured corporate bank loan. Mostly offered to SMEs by banks like DBS, OCBC bank, Maybank, UOB, Standard Chartered, RHB bank, Citibank, and Bank of China (BoC Singapore).
- Loan Amount: S$30K to S$500K
- Loan Term: 1 – 5 years
- Interest Rates: 7% – 12% p.a.
2. SME Working Capital Loan
SME Working Capital Loan was initiated by SPRING Singapore in June 2016 as a financing scheme to encourage lending to SMEs in Singapore. It is only offered by the banks and financial institutions that participated.
- Loan Amount: Up to S$300K
- Loan Term: 1 – 5 years
- Interest Rates: 6.5% – 7.5% p.a.
3. SME Micro Loan
Launched by SPRING Singapore (now Enterprise Singapore) in 2016 as a financing scheme to help SMEs gain greater access to working capital. It is only offered by the banks and financial institutions that participated in the scheme.
- Loan Amount: Up to S$100K
- Loan Term: 1 – 5 years
- Interest Rates: 6.5% – 7.5% p.a.
4. Start Up Business Loan
Essentially an unsecured term loan offered to startups in Singapore. Offered by only 2 institutional lenders. The start up business loan is now only open to medical professionals (medical doctors/dentists) who are starting a new private practice.
- Loan Amount: Up to S$450K
- Loan Term: 1 – 5 years
- Interest Rates: 4.98% – 6.88% p.a.
5. Equipment Financing
The only secured lending facility in the list. With a structure that is similar to a hire purchase or leasing loan, equipment financing provides the borrower with funds to purchase machinery and equipment.
- Loan Amount: Up to 80% of equipment value
- Loan Term: 1 – 5 years
- Interest Rates: 5% – 8% p.a.
Now widely accepted as a legitimate source of alternative lending, crowdfunding in Singapore is mostly associated with P2P lending platforms that facilitate secured lending (invoice financing) projects.
- Loan Amount: Up to 80% of invoice value
- Loan Term: 30 – 120 days
- Interest Rates: 12% – 18% p.a.
Here's How To Find and Qualify for the Best Business Loans...
Even if you are able to qualify for all corporate loans…
…with so many loan products in the market, where do you get started?
Which corporate loan is best for you?
Let the following steps guide you:
- Determine your loan amount
- Your credit score and how it affects your business loan application
- Applying and repaying your business loan
Determine Your Loan Amount
- What are you going to use the funds for?
- How much can your business afford?
What do you need a small business loan for?
It is important to determine what you want to use the funds for… specifically.
Be very objective with your answers:
It will determine the type of small business loan to apply for.
If the need was to finance an invoice, get invoice financing.
If the need was to finance regular business expenses, get a small line of credit.
You get my drift…
…be specific about how the funds are utilized.
Here is a list of common business funding needs:
- To expand your business
- To make payment for equipment or inventory
- To invest in a business opportunity
- To start a business
How much can your business afford?
The one question that every lender will ask:
“How much are you looking for?”.
While it can be exciting to take up a big loan amount, you should always be prudent to think of how much your business can afford, not how much you want.
If you are unsure of how much your business can afford, follow the steps below.
Calculate Your Debt Service Ratio Coverage: A Simple Step-by-Step Guide
Let’s try this out:
To find out the maximum loan installment amount that your business can afford to pay monthly, please take a few moments to calculate your debt service coverage ratio.
This is the figure that the banks use to determine if you have enough cash flow to meet monthly repayments.
This is also the number that YOU should use to make sure your business is comfortable with monthly repayments.
To calculate your debt service coverage ratio, follow this simple formula:
Cash Flow / Loan Payment = Debt Service Coverage Ratio (DCSR)
To apply the formula, use either monthly or annual figures.
Here’s how the calculation works:
- Determine the value of your monthly cash flow.
- Determine the value of your monthly loan installment.
- Divide the value of your monthly cash flow by the value of the monthly loan installment.
First, determine the value of your cash flow by calculating your average cash flow.
(sales – expenditure = cash flow)
How much revenue comes into your business each month?
Let us assume the value of your cash flow to be $10,000 per month.
How much do you think your monthly business loan repayment will be?
Let’s take it to be $2,000 per month.
So, 10000 / 2000 = 5.
Therefore, you have a debt service coverage ratio (DSCR) of 5, which is very acceptable and affordable!
Most financiers require for your DSCR to be at least 1.
If your DSCR is below 1, it is likely that your business is not generating sufficient cash flow to maintain monthly loan repayments.
In some cases, lenders even require for your DSCR to be at least 2. It is always good practice to use this ratio for your own reference too.
How much is your business comfortable with?
If it is 2, take your average monthly cash flow and divide it by 2.
With this amount, go for a loan that will allow your monthly repayments to be equivalent to that amount.
Business Loan Performance Analysis
Always remember that the reason for for getting a business loan is to invest in your business.
When you get a business loan, you need to be sure that this investment will bring you profit.
Are you confident that this loan will grow your business?
Do a loan yield analysis:
By conducting a yield analysis, you will see how business loans can influence your company.
It will also help you to properly determine the appropriate amount to borrow.
Plan Your Ideal Loan Payment Schedule
Having seen how business loans can influence your business, and with the knowledge to calculate your debt coverage ratio, decide on a monthly repayment amount that you are comfortable with.
Retain this figure in your memory as you apply for your loan.
How To Qualify For A Business Loan Singapore
- What is your credit score?
- How long have you been in the business?
- What is your annual revenue
What Is Your Credit Score?
Your personal credit score is one of the most crucial aspects of a business loan application.
Lenders take a serious view on the credibility of the business owner, wanting to know that they are lending to a good paymaster.
With a healthy credit score, securing a business loan becomes a lot easier.
A good way to accelerate the business loan process before applications is to pull your own credit bureau report to see your personal credit score.
This can be obtained at creditbureau.com.sg for a small cost of S$6. By knowing your own credit grading, you will have a clearer perspective of what to expect.
How Your Credit Score Affects Your Business Loans
When you download your credit bureau report, the first thing to do is always to check for errors. Your report may contain errors that are affecting your credit score.
Here are a few common errors:
- Inaccurate late payments or credit facilities
- Payments that were already made but are still shown as an outstanding balance
- Recorded payments that you are unaware of
To correct such errors, you must first be sure that the reflected information is inaccurate. If it is a matter of credit payment, you should call the creditor and ask them to let their respective banks know that you have made full payment. If it is a debt that you are not aware of, call the banks to verify who the credit is due to.
For other issues, you should contact the credit bureau directly. If needed, write a letter in to dispute the matter, supported with relevant documents as proof. Credit bureaus have an obligation to provide clarity on such issues and usually take about 3 to 4 weeks to get back to you.
What if you can’t find any errors in your credit report?
Look through the report, pay attention to your repayment patterns, and try to look out for areas of credit payments that you can improve on.
As we have established, repayment patterns have the biggest influence on your credit score. Paying your bills on time is the best way of ensuring a good credit score.
If you are wondering about what exactly a good credit score is, the answer is dependent on the type of loan that you want. For a business loan in Singapore, it is essential for the director to have a credit score of at least “AA”, “BB” or “CC.”
For a personal loan, some lenders are willing to accommodate up to a grading of “HH”. If you are confident that you can take measured steps to improve your credit score, it may be wise to do so over a span of a few months.
Follow the steps above to improve your credit score in the shortest possible time.
Here's How To Apply For A Small Business Loan
- Gather all relevant documents that need to submit
- Review ALL your loan offers
Now get this:
You can apply for your SME loan in 3 simple steps – all within 1 minute!
- Click on the “Get Started” button.
- Answer a few simple questions to complete the sign up.
- Provide us with all requested documents and information.
After that, all you have to do is:
Sit back, relax, and wait for the SME loan approvals to fly in.
What Are The Financial Documents Required For A Business Loan Application?
Of all the corporate loan products in Singapore, small business loans seem to always have the most number of applications.
It is good to understand that each lender is different and will have slightly different requirements.
Here is a general list of required documents that are usually needed for small business loan applications:
- Latest 6 months of Business Bank Statements
- Latest 2 years of Balance Sheets
- Latest 2 years of Profit and Loss Statements
- Statement of Accounts (if any)
- Latest 2 years of Income Tax Statements
- National Identification/Passport copy of Director(s)
What are the details of your business loan offer?
Bet you could not answer that right away! And that is totally fine.
But just to drive my point across:
Always compare your small business loan offers…
…especially when there are so many funding options out there.
If you are one of those who gets dizzy by just looking at these numbers, don’t worry!
Simply use our business loans comparison tool to get the best SME loan offers in just seconds!
FAQ on Business Loan Singapore
Here are my 3 reasonable reasons:
- In the long run, a business loan will cost a lot less than giving up business equity.
- Business loans have a finite term to expiry, while giving up equity of your business is forever.
- Business loans will build up your company’s credit risk profile.
We know what you are thinking:
“It can’t be all rainbows and butterflies!”
And… you’re actually right.
There are some downsides to getting a small business loan for business expansions.
Here are 2 reasons to consider before choosing the business loan:
1. You will need to pay monthly installments, which can affect the cash flow of your company.
2. Small business loans have a maximum amount; while funds raised via VC fundings and private investments do NOT have a ceiling.
If YOU are reading this… it’s because you still need that small business loan.
Well, good news for you –
We will help you to get the SME loan that your business needs, FAST and HASSLE-FREE process.
Before we go any further, here are the 5 VERY IMPORTANT TIPS to qualify for a small business loan:
- Business revenue from last financial year should be at least S$300,000 and above.
- Maintain a minimum balance of S$10,000 in your company bank account AT ALL TIMES.
- Current year’s net profit should be higher than the previous year.
- If you are the director of a company, your personal credit score should be between an AA to CC.
- If possible, clear all outstanding personal and corporate loans before you apply for a new SME loan.
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About Capable Group
Capable Group is a comparison platform for business loans in Singapore. As the leading aggregator of corporate loans and business financing solutions, we will help you to get the best SME loan to grow your business. We work with multiple banks and accredited financial institutions to provide you with the latest financial products and interest rates.