{"id":2479,"date":"2021-10-14T06:36:08","date_gmt":"2021-10-14T06:36:08","guid":{"rendered":"https:\/\/cashinasia.com\/sg\/?p=2479"},"modified":"2021-10-14T06:42:38","modified_gmt":"2021-10-14T06:42:38","slug":"singapore-business-loan-interest-rate-guide-to-best-sme-loans-for-small-business-singapore-2021","status":"publish","type":"post","link":"https:\/\/cashinasia.com\/sg\/singapore-business-loan-interest-rate-guide-to-best-sme-loans-for-small-business-singapore-2021\/","title":{"rendered":"Singapore Business Loan Interest Rate: Guide to Best SME Loans for Small Business Singapore (2021)"},"content":{"rendered":"

Properly financing your small business is critical to its success.<\/span><\/p>\n

You understand that you need to invest in it now to see it flourish for your startup company to succeed truly.<\/span><\/p>\n

But that doesn’t mean you should go for just any business loan!<\/span><\/p>\n

We’ve compiled a list of the finest business loans in Singapore so you can compare interest rates and costs before deciding on the best option for your company.<\/span><\/p>\n

What are the Types of Business Loans Available in Singapore?<\/b><\/h2>\n

Any loan granted to a business for commercial reasons is referred to as a business loan.<\/span><\/p>\n

There are many different business loan options: some are available for any company purpose (such as managing cash flow or expanding your firm), while others are tailored to specific business needs (such as machinery\/equipment or property loans).<\/span><\/p>\n

There are even specific business loans for start-ups!<\/span><\/p>\n

Want to find out the best financing options for your specific small business?<\/span><\/p>\n

Keep on reading to find out the most prevalent types of business loans in Singapore!<\/span><\/p>\n

Unsecured Business Term Loan<\/b><\/h3>\n

Current interest rate: 10% to 13% p.a.<\/b><\/h4>\n

An unsecured business term loan is the most common type of business loan.<\/span><\/p>\n

The loan amount can range from S$50,000 to S$400,000 per bank, with no collateral required. This financing option gives you a repayment period of up to 5 years to pay it off via equal monthly instalments.<\/span><\/p>\n

Furthermore, yearly top-ups for existing loans are also available.<\/span><\/p>\n

But the best part is: all the major banks in Singapore offer these business loans to SME business companies!<\/span><\/p>\n

SME Working Capital Loan<\/b><\/h3>\n

Current interest rate: 6.5% to 7.5% p.a.<\/b><\/h4>\n

This is a unique form of business loan available to Singapore-registered small-to-medium enterprises with at least 30% Singaporean\/PR ownership.<\/span><\/p>\n

The initiative between the Singapore government and major banks has created a once in a lifetime startup business loan for small businesses.<\/span><\/p>\n

The SME working capital loan provides funding of up to <\/span>S$1 million per borrower<\/b>, repayable over a period of one to five years.<\/span><\/p>\n

This business loan has a great repayment model, allowing businesses to repay banks at any period with no penalty and a pro-rated interest!<\/span><\/p>\n

Temporary Bridging Loan<\/b><\/h3>\n

Current interest rate: capped at 5% p.a.<\/b><\/h4>\n

The temporary bridging loan is another government-assisted business loan to help all Singapore businesses given Covid-19’s impact on the economy.<\/span><\/p>\n

That’s right – you don’t have to be an SME to receive this financing!<\/span><\/p>\n

This business loan aims to ease the wealth management of SMEs by improving access to financing (up to S$5M) and lowering the cost of financing with a 5-year repayment period.<\/span><\/p>\n

Startup Business Loan<\/b><\/h3>\n

Current interest rate: 2.5% – 4.5% p.a.<\/b><\/h4>\n

The starter company loan, sometimes known as a “first business loan,” is a smaller version of a conventional business loan,\u00a0 capped at S$100,000.<\/span><\/p>\n

It’s much easier to receive a startup business loan as the terms are relatively lax: you only need to be open for a few months and don’t need to have a long credit history.<\/span><\/p>\n

Trade Financing<\/b><\/h3>\n

Current interest rate: 6.75% to 8% p.a.<\/b><\/h4>\n

Trade financing allows SMEs in Singapore to finance inventories or material purchases from suppliers based on credit.<\/span><\/p>\n

With a Letter of Credit (LC), Singapore companies can buy up to their trade financing limit by paying the selected bank’s interest rates.<\/span><\/p>\n

Did you know that LCs from this business loan can also be awarded to overseas suppliers?<\/span><\/p>\n

This loan is a great option for businesses with less working capital.<\/span><\/p>\n

Factoring \/ Receivables Financing<\/b><\/h3>\n

Current interest rate: 6% to 8% p.a.<\/b><\/h4>\n

Invoice financing is the way this loan works.<\/span><\/p>\n

You may be asking: what is invoice financing?<\/span><\/p>\n

It is where financiers advance between 80% and 90% of the value of your customers’ outstanding invoices.<\/span><\/p>\n

Suitable for trustworthy SMEs that provide services to reputable companies in Singapore.<\/span><\/p>\n

You really need to have a stellar credit score before applying for this business loan!<\/span><\/p>\n

Property Financing<\/b><\/h3>\n

Current interest rate: 1.3% to 2.5% pa..<\/b><\/h4>\n

In need of business premises for your company to operate?<\/span><\/p>\n

Commercial or industrial property can be purchased with the help of a mortgage loan.<\/span><\/p>\n

SMEs have the option of pledging existing assets to banks for application of this business loan.<\/span><\/p>\n

Because of its collateral nature, the interest rates for this method of financing are significantly cheaper than other business loans!<\/span><\/p>\n

Equipment Financing<\/b><\/h3>\n

Current interest rate: 5% to 8% p.a.<\/b><\/h4>\n

An SME business can use this loan to buy crucial products for their businesses on a hire-purchase or lease basis.<\/span><\/p>\n

Looking to grow your Singapore business by investing in modern equipment?<\/span><\/p>\n

Then equipment financing is the best option for you, especially if you’re looking to improve cash flow!<\/span><\/p>\n

 <\/p>\n

How do I Get an SME Business Loan in Singapore?<\/b><\/h2>\n

Supporting the expansion and operations of a fast-growing business often necessitates large financial resources.<\/span><\/p>\n

SME business loans allow you to invest in your company, whether to expand your personnel, relocate to a larger location, or open additional branches.<\/span><\/p>\n

Because there are various ways to fund your business in Singapore, this article will assist you in deciding which strategy is best for your SME loans!<\/span><\/p>\n

Bank Loans<\/b><\/h3>\n

Banks in Singapore offer two types of corporate financing: funding and working capital loans.<\/span><\/p>\n

A working capital loan is used to fund your company’s day-to-day operations, as the name implies.<\/span><\/p>\n

Working capital loans aren’t used for long-term asset purchases or investments. Instead, they’re utilised to pay for things like wages and accounts payable.<\/span><\/p>\n

Meanwhile, for bank funding, as part of your business loan application, you are required to share your business plan, valuation and project report.<\/span><\/p>\n

Every bank in Singapore provides SMEs loans via their unique programmes. Some common bank funding includes UOB BizMoney Loan and DBS BusinessTerm Loan.<\/span><\/p>\n

P2P Crowdfunding<\/b><\/h3>\n

Peer-to-Peer Crowdfunding is a type of business financing where people lend to each other.<\/span><\/p>\n

P2P lending systems enable members of the public to connect with businesses in need of funding.<\/span><\/p>\n

You may be familiar with Kickstarter campaigns for indie projects – that’s a common business financing that relies on individuals for support.<\/span><\/p>\n

Public investors lend money to your business in exchange for interest rate returns or profits during the repayment period.<\/span><\/p>\n

It is one of the quickest and easiest SME loans available in Singapore! Let us tell you why:<\/span><\/p>\n