In Singapore, SMEs make up 99% of Singapore’s enterprises and employ 65% of the Singaporean workforce. In other words, SMEs are the backbone of Singapore’s economy. SMEs have also generated half of the nation’s growth in gross value added in the past 5 years. That is to say, on average, each Singaporean SME employs 10 workers and contributes S$900,000 in gross value added (GVA) to the economy.

However, it is also a fact that 4 out of 5 SMEs don’t qualify for a business loan. Such is the irony that one of the largest contributing sectors to our economy has little to no access to financial aid. Despite the bleak predicament, it is always best to know the various financing options available for SMEs in Singapore. This knowledge will come in handy someday, as businesses need an injection of funds from time to time (link why business need a loan) for growth. Your business may not qualify for some listed below but may qualify for others.

In this article, we will look at all the available loan options for Singaporean SMEs from the top 3 banks in Singapore namely DBS, OCBC and UOB as well as from Funding Societies and FS Bolt – Singapore’s fastest mobile loan application.

Here we’ve compiled in a table format for each type of loan from different banks. If the spaces are left unfilled, that is because the information is not made available to the public, it is then best to contact the bank to clarify.

 

Working Capital Loans

A working capital loan is provided by the banks to help the everyday operations of a business. It is used to cover accounts payables, wages, etc. and not for long-term assets or investments.

 

DBSOCBCUOB
NameDBS Business Term LoanOCBC Business Term LoanOCBC Business Revolving Short Term loanUOB Business LoanUOB Biz Money
Loan AmountUp to SGD 500kUp to SGD 500kUp to SGD 200kUp to S$550,000Up to SGD 350k
Tenor5 years5 years6 or 12 months repayment periods5 years3 years
Interest (p.a.)10.88%Indicative rate at 8.5%Indicative rate at 10.88%
CollateralNoneNone, only personal guaranteeNone, only personal guarantee
Cancellation Fee2.0% of loan amount
EligibilityAll locally registered business entities are eligible for application. Business entities comprise sole proprietors, partnerships and private limited companies.– Singapore registered entity

– Business is at least 30% owned by Singaporean or Singapore PR

– Company must be in operation for the last 2 years

For businesses registered and based in Singapore that are at least 2 years old– Sole Proprietor, Partnership or Private Limited Company

– Minimum 3 years in business

– Registered and operating in Singapore

– Company’s group annual sales of not more than S$100 million OR company’s group employment size of not more than 200

– Annual sales turnover and employment size will be computed on a group basis (i.e. All levels up for corporate shareholders holding – > 50% of total shareholding of the applicant company and any subsequent corporate parents, and subsidiaries all levels down).

– Sole Proprietor, Partnership or Private Limited Company

– Minimum 3 years in business

– Registered and operating in Singapore

OthersLock-in period of 2 yearsSteps

1. Draw from your facility limit at any time with a minimum amount of S$25,000

2. Repay what you’ve drawn with equal monthly instalments over the selected repayment period

3. Redraw from your available facility limit as the loan gets repaid

The advantage of a working capital loan is the loan amount of up to SGD 500k. However, it is very unlikely to get the maximum amount of the loan unless you have an excellent financial standing. If the business is to file for bankruptcy, the business owner is still liable to pay back the loan. The interest rate of a working capital loan is also much higher compared to other loans.

 

SME Micro Loan

The SME Micro Loan is one of the government’s supported loan as a joint collaborative effort with the banks. It is an initiative from the Singaporean government to help local SMEs.

The SME Micro Loan can be used to better manage daily operations and business cash flow. Known as SPRING and now Enterprise Singapore, they share the risk of loan defaults with participating banks in the event of company insolvency.

 

DBSOCBCUOB
NameDBS SME Micro Loan OCBC Business First LoanUOB SME Micro Loan
Loan AmountUp to SGD 100kUp to SGD 100kUp to SGD 100k
TenorUp to 4 years
Interest (p.a.)From 7%
CollateralGuarantorGuarantor
Eligibility– At least 30% local shareholding

– Employs 10 workers or less OR has turnover of SGD 1 million or less

– Business is registered and operating in Singapore between 6 months and 2 years

– At least 30% owned by Singaporean or Singapore PR

– No more than 10 employees or annual turnover not exceeding S$1 million

– At least 1 guarantor must be Singaporean or Singapore PR, aged between 21 and 62

– Additional eligibility criteria may apply

– Registered and operating in Singapore

– Company has 10 or less employees OR

has annual sales not exceeding S$1,000,000

– At least 30% local shareholding

– Company’s group annual sales of not more than S$100 million OR

company’s group employment size of not more than 2005

The SME Spring Loan is a government-supported loan, therefore, interest rates are also typically lower than the banks’ unsecured commercial loans.

However, only small SMEs are eligible, as defined by the condition that only companies with annual sales of S$1 million or less, or 10 employees or fewer. 

 

SME Working Capital Loan

The SME Working Capital Loan is also a joint collaborative effort between Enterprise Singapore and the participating banks to help SMEs to grow. Launched in June 2016, the loan acts as an additional financing option by helping eligible companies cope with larger working capital and cash flow needs. 

 

DBSOCBCUOB
NameDBS SME Working Capital LoanOCBC SME Working Capital LoanUOB SME Micro Loan
Loan AmountUp to SGD 300kUp to SGD 300kUp to SGD 300k
TenorUp to 5 years
Interest (p.a.)From 7%
CollateralGuarantorGuarantor
Eligibility– Need Financial Statements, Bank Statements, Personal Income Tax Assessment

– Company registered and operating in Singapore

– At least 30% local shareholding

– Group annual sales of ≤ S$100m or group employment size ≤ 200^

– Companies that are at least 2 years old

– At least 30% Singaporean or PR shareholding

– Group annual sales of ≤ S$100m or group employment size ≤ 200^

– ^Annual sales turnover and employment size will be computed on a group basis (i.e. All levels up for corporate shareholders holding > 50% of total shareholding of the applicant company and any subsequent corporate parents, and subsidiaries all levels down)

– Registered and operating in Singapore

– At least 30% local shareholding

– Company’s group annual sales of not more than S$100 million OR

company’s group employment size of not more than 200

OthersOne week to process your application upon receipt of full documentation.

This loan is suitable for SMEs that run on a bigger scale as compared to SMEs who are eligible for the SME Micro Loan. However, businesses’ needs to be at least 2 years to be eligible as stated in the OCBC SME Working Capital Loan eligibility criteria.

 

Trade Financing / Loan Insurance Scheme (LIS)

Companies can secure short-term trade financing with the Loan Insurance Scheme (LIS), which insures the banks against any insolvency risks of the borrowers.

The risk is co-shared with 75% risk borne by insurers, and Enterprise Singapore bears 50% of the cost of the insurance premium.

 

DBSUOB
NameDBS Loan Insurance SchemeUOB Loan Insurance Scheme
Loan AmountNo limit
Interest (p.a.)Depends on risk profile
EligibilityFor overseas trade facilities:

– Your business must be Singapore-based

– The annual turnover for your business and its majority-owned subsidiaries must not exceed SGD 300 million if you are a non-trading company, and SGD 500 million if you are a trading company (where more than 50% of turnover comes from buying and selling goods)

For domestic trade facilities:

– Your business must have at least 30% local shareholding (Singaporean or Permanent Resident)

– Your business’ group annual sales turnover must not exceed SGD 100 million OR the workforce must not exceed 200

– Registered and operating in Singapore

– At least 30% local shareholding

– Company’s group annual sales of not more than S$100 million OR

company’s group employment size of not more than 200

OthersInventory/stock financing – 100% of purchase price

Structured pre-delivery working capital – 100% of Letter of Credit or Letter of Confirmed Sales Order

Accounts Receivable Purchasing – 100% of invoice value

Banker’s Guarantee or contractual fulfilment – 100% of contract value

Choose from Inventory/Stock Financing or Bill/Invoice/Account Receivable discounting with recourse

It is a relatively easy way to arrange for short-term financing and this allows the business to focus on their growth activities. However, one’s business will need to have a good track record in terms of operations and repayments, and therefore, this loan is less accessible for new companies.

 

Property Financing

Banks offer mortgage loans to finance your commercial property. SMEs have the option to pledge existing property to banks for other financing facilities as well.

 

DBSOCBCUOB
NameDBS Business Property LoanOCBC Commercial Property LoanUOB Business Property Loan
Loan AmountUp to 120% of your business property valueUp to 80% of the purchase price or valuation of your property
TenorUp to 30 years
CollateralCommercial propertyCommercial propertyCommercial / residential property
Eligibility– All Singapore-registered businesses are eligible to apply.

– Applicable to all new and existing DBS corporate customers.

– For individuals or Singapore registered entities

– Company turnover must be less than or equal to S$20 million

– At least 30% local shareholding

Others– Loan application and supporting documents MUST be submitted OnlineFlexibility to take up financing in the form of term loan, overdraft or trade facilities

You can keep the ownership of the property once you take up this loan. It also improves cash-flow management, provided that the bank agrees, you can sub-let some of your business premises.

You will still be liable for the property’s maintenance, insurance and security. If the value of the property goes down, you would still be paying for the same loan amount.

 

Equipment Financing

Equipment financing might come in handy if your business heavily relies on equipment or machinery.

 

DBSOCBCUOB
NameDBS Equipment Financing LoanOCBC Equipment & Machinery FinancingUOB Commercial Vehicle & Machinery Financing
Loan AmountUp to 90%* of the purchase price or valuationUp to 90% of the valuation or purchase priceUp to 80% of the market valuation or purchase price
Interest (p.a.)
TenorUp to 5 yearsUp to 7 years
EligibilityAny new or existing corporate customer of DBS Bank Ltd.Singapore registered entity
Others– Flexibility to tap on the Government-assisted loan offered through the Local Enterprise Financing Scheme

– Financing for both new and used equipment

Obtain ownership of the asset upon fulfilling payment of loan instalment

With this loan, you can get access to high standard equipment that you might not be able to afford otherwise. The interest rates are usually fixed and this loan is less risky as compared to other bank loans, as when you default on payments, you will lose the asset only.

You can also claim tax deductions on capital allowances from the government. However, with this type of loan, you are paying even more for the asset as compared to just buying it outrightly.

 

Factoring / Invoice Financing / Receivables Financing / Purchase Financing

A big factor in insufficient cash flow is the late payments made by buyers to suppliers. This loan helps relief this situation and allows better cash flow management for a business. Highly suitable for SMEs who serve reputable companies with long credit terms.

 

DBSOCBC
NameDBS Accounts Receivable PurchaseOCBC Business Purchase Financing
Loan AmountUp to 90% of the value of your receivables
Eligibility– Singapore registered entity

– Business is at least 30% owned by Singaporean

or Singapore PR

– Business must be in operation for the last 2 years

– Other eligibility criteria apply

OthersGuaranteed up to 100% credit protection against buyer default in the event of insolvency and/or if the buyer is unable to pay after a predetermined period of time following the invoice due date.– Pay interest only on what you use

– Pay the bank 90 days later after receiving goods from supplier

However, you will only get a maximum of 90% of the value of the invoices upfront and not the full payment from the banks. Being the buyer, you will be charged interest if late payments are made.

 

Overdrafts

With overdrafts, banks extend credit to businesses in order to help them with timely payments and also for easier cash flow management. SMEs will have easy access to funds whenever they need.

 

DBSOCBCUOB
NameDBS Unsecured Overdraft (UOD)OCBC Business OverdraftUOB Overdraft
Loan AmountUp to SGD 500kUp to SGD 200k
Interest (p.a.)From 12.8%
TenorRevolving, subject to annual review
CollateralCollateral-free
EligibilityAll locally registered business entities are eligible for application. Business entities comprise

sole proprietors, partnerships and private limited companies.

– Singapore registered entity

– Business is at least 30% owned by Singaporean

or Singapore PR

– Business must be in operation for the last 2 years

– Other eligibility criteria apply

Interest rates only occur when the business uses the overdraft facility. However, the interest rates are slightly higher than other sources of borrowings.

 

Venture Debt Financing

With everyone going into startups and becoming entrepreneurs, banks have also started to see a rise in the entrepreneurship and the need to facilitate funding.

 

DBSOCBC
NameDBS Venture Debt FinancingOCBC SME Venture Loan
Loan AmountUp to SGD 5 million
TenorUp to 6 years
Eligibility– To qualify, tech start-ups must be strongly backed by DBS’ partner venture capitalists. They should have raised at least SGD 3 million of equity funding and have demonstrated that their business model is commercially viable.

– Open to registered entities in Singapore or within our DBS network countries.

– Business has a clear growth plan

– Business is registered and operating in Singapore for the last 2 years

– Business is at least 30% owned by Singaporean or Singapore PR

– Group sales turnover is not more than S$100 million or Group employment is not more than 200 workers

OthersA form of debt financing offered to growth stage start-ups that are backed by venture capital investors and leveraging on technology to enhance their products or services.

This loan is not available for all startups or tech startups as it is not easy to secure funding from venture capitalists in the first place. Plus, only businesses in operation for 2 years are eligible to apply for OCBC’s SME Venture Loan.

 

Internationalisation Finance Scheme

Internationalisation Finance Scheme (IFS) is a programme designed to assist aspiring Singapore-based companies who wish to venture abroad and are in need of financing facility.

 

DBSOCBC
NameDBS Internationalisation Finance SchemeOCBC Internationalisation Finance Scheme
Loan AmountUp to SGD 30 million
Eligibility– Your business’s global HQ is anchored in Singapore.

– The loan must be used to support your expansion overseas

– Your annual turnover must not exceed SGD 300 million for non-trading companies, or SGD 500 million for trading companies (where more than 50% of your turnover comes from buying and selling goods)

– Your overseas business must complement your core operations and result in an economic benefit to Singapore

– Singapore registered entity with substantial business functions in Singapore

– Overseas business must complement the Singapore company’s core operations and benefits Singapore’s economy

Group turnover

– Not exceeding S$500 million for trading companies (S$300 million for non-trading companies)

OthersFinancing for acquisition of revenue generating fixed assets and funding of overseas projects and sales orders

This loan is suitable for SMEs who wishes to expand overseas. The Internationalisation Finance Scheme (IFS) is also a government-supported initiative by Enterprise Singapore.

 

Funding Societies

Started 3 years ago, Funding Societies was created to give SMEs access to more means of financing. Now it’s Singapore’s three largest peer-to-peer lending platforms, having also secured themselves in Malaysia and Indonesia.

They currently offer the SME Business Loan product which offers quantum of up to SGD 500k with no collateral needed and a simple application process. They also offer invoice financing of up to 80% of the value of the invoice, and interest rates lower than the borrowings offered from banks. 

 

FS Bolt 

FS Bolt, on the other hand, is a mobile application created by Funding Societies for SMEs to take up a micro loan of up to SGD 50k. There are no collaterals involved, no complicated paperwork required and the approval period of only 2 hours. Funds will also be disbursed within 24 hours.

 

Conclusion

There are many loan options for SMEs to choose from, all for different purposes and objectives to suit each and every need. Different banks and financial institutes have different sets of criteria and eligibility which is why it is best to equip oneself with this knowledge.

Commonly, it is hard to secure a loan from a bank due to a myriad of reasons, however, one can always opt to try FS Bolt, a simpler and faster way to get funding for your business.  

 

Download the FS Bolt app here for a loan quantum injection of up to SGD 50k within 24 hours.

Funding Societies – Capital Markets Services License No: CMS100572-1 issued by Monetary Authority of Singapore (2016)

 

*All bank loan information are updated as of 2nd May 2018. The information listed here may have been updated or changed, to get the latest updates, kindly call the respective banks for more precise information.

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