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How To Find The Best Business Loan In Singapore

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A business loan Singapore is one of the most essential products any Singapore business should consider when they’ve stabilized their operations and improved their overall systems. A business loan allows Singapore companies to expand and scale their operations at will. The added financing allows them to purchase new equipment, more employees, and even branches when they need it.

Many lenders provide Singapore business loans with low-interest rates, especially for an SME that has an excellent credit score. In this post, you’ll learn about the best business loans that each have an excellent repayment period, defined effective interest rate, and years of repayment needed.

Why Should You Get a Business Loan?

You’ve used your own money to begin your start-up’s operations. During this time, you’ve earned back your investment and continue to gain profit. Furthermore, your brand’s demand is increasing, but your existing equipment and facilities are struggling to cope with the average demand.

Taking out a business loan Singapore gives you instant cash that gives your business the upgrades it needs. With extra hands, better equipment, and more branches, you can satiate your brand’s demand and improve your business performance and income.

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7 Business Loans Suitable for Companies of All Sizes

SME Working Capital

Singapore’s government wants to make sure that any SME in Singapore has access to excellent funding to float them through the Circuit Breaker. To curb their possible debts because of greatly-reduced demand, the Enterprise Financing Scheme (EFS) has made the SME working capital available for any business across Singapore.

Now, any SME can receive up to S$1 million in funding, which is enough to tide over any SME struggling with lower sales. Furthermore, its interest rate is at a very low 2.5-3% yearly addition. Depending on the EFS’ risk assessment of companies, the effective interest rate is within the figures we mentioned. Additionally, the repayment period can vary between 1-5 years.

Business Term Loan

Term loans for any business — which most know as the SME standard loan — is financing that has nominal interest rates but has lower loan amounts than the special EFS SME working capital loan.

The maximum loan amount any SME can have is S$500,000, which is half of the SME Circuit Breaker loan. However, it has a nominal interest rate at 2.25% added per year and similar repayment period of 1-5 years. Furthermore, you can have your business loan amount in just two weeks too.

Equipment Financing

This business loan focuses on any SME who need additional equipment, tools, and other devices to operate nominally and meet their higher demand. However, any SME must take out individual equipment financing for every new item they need for their expanded operations.

This financing is different from any working capital loan because of its maximum business loan amount. You’ll receive funding just enough to cover 100% of the item’s total value. However, it differs from traditional in-house product financing or personal financing options because business owners can pay them in 1-5 years with a friendly interest rate of 1.8-2.5%

SME Micro Loan

An alternative to its working capital loan, EFS’ SME microloan focuses on smaller loan amounts for enterprises struggling to keep afloat but need financing with low interest and the longer repayment period. This financing is helpful, especially with demand at an all-time low for many Singapore brands.

The only difference it has with its more generous counterpart is its loan amount of S$100,000. The repayment period of 1-5 years, an interest rate of 2.5-3%, and speed of issuance at two weeks remain similar for both EFS circuit breaker financing.


Validus Capital and Funding Societies are two startup crowdfunding services that fall into this category. Thanks to generous and business-supportive groups, crowdfunding is truly a formidable source for an excellent Singapore business loan.

With crowdfunding services, business owners can borrow up to S$5 million, which is five times the size of EFS’ business loan for enterprises affected by the Circuit Breaker. However, this financing offers a shorter repayment period of 12-36 months. On the other hand, business owners receive a better interest rate of 12-18% per year.

On the other hand, crowdfunded loans can fail if investors are not interested in filling up the loan quota by the end of its deadline. Furthermore, you’ll need to present your business expansion plan similar to Kickstarter projects.

Marine And Offshore Engineering Loan

Both marine-oriented and offshore engineering businesses have seen huge setbacks since the beginning of Singapore’s Circuit Breaker. However, the government and EFS have readied financial support for these industries through the M&E Offshore Engineering loan.

These big industries contribute greatly to Singapore. Therefore, the specialized business loan in Singapore provides one of the biggest sums to marine and offshore engineering businesses with a maximum of S$15 million. Furthermore, its repayment period goes beyond the average 5-years payment period up to seven years.

However, it has a bigger interest rate than the working capital and other business loans listed here. It stands at a whopping 6.75-8.25% yearly interest rate increase and a slight release delay of three weeks.

Startup Business Loan

Most startup business loans come from venture capitalists. These financing groups look at business plans and goals of each start-up company. Then, they provide different rounds of financing depending on the business’ performance.

Equity financing is another popular method to increase financing for startup businesses. However, you’ll need to provide expected dividends within the optimistic and pessimistic predictions on your business’ performance at a given term.

Truthfully, startup companies can take out bank loans for their business start-up funding, but they have the lowest chance of approval because of their unproven business track record.

Money with a padlock

What Are Secured and Unsecured Loans?

Financing comes in different forms. You can take out a secured or unsecured business loan for your company.

Secured loans involve collateral, which can be any property or item of value that you own. For example, a startup business can use their machinery and fully-paid property as collateral should they fail to pay their business loans in Singapore completely. Furthermore, secured loans have lower interest rates, flexible payment options, and longer payment terms.

Business, real estate, and high-amount loans are mandatory secured loans. Borrowers need to present sufficient collateral to take out their financing.

Unsecured financing is the EFS’ working capital loans, personal financing, and moneylender loan products you can take out quickly. Unlike secured loans, you won’t need collateral to receive them. However, you can only take out modest amounts and might be subjected to higher interest rates.

3 Primary Uses of a Business Loan

General Business Expansion

Any Singapore business takes out financing so they can improve their operations. Truthfully, it’s the company’s initiative if they wish to meet the increasing demand for their products and services. However, for high-demand commodities, such as food and clothing small and medium enterprises, a general company’s expansion uses a business mortgage to further their operations efficiently.

Financial companies, such as banks, trade unions, government funds, and venture capitalists, supply general business loans. These include those we’ve listed above. However, these institutions need to know your plan of action and the logical and profitable route of the company.

Property Acquirement and Physical Branches

A general business loan in Singapore is too broad to handle both property acquisition and funding for a brand’s needs. In this light, it’s better to find an SME loan that tackles property development and the creation of physical branches.

In doing so, it helps avoid unnecessary financing of other aspects that an SME might not need yet, such as increasing their employee numbers and equipment. Focused property acquisition and branch expansion loan help businesses focus their efforts on paying off their new property first with sufficient interest and loan amount.

Inventory Reimbursement and Scaling

Alternatively, general loans in Singapore do not address the immediate need for additional equipment and demand increase of other businesses. An inventory reimbursement and scaling loan from financial institutions will focus on resource acquirement rather than general company growth.

Doing this allows the financial institutions to provide just enough loan amounts with better effective interest and amounts than the usual loans in Singapore for business. Furthermore, it helps businesses have manageable stepping stones toward their brand’s growth.

Businesswoman with a loan contract

Borrowing From Banks and Moneylenders


Higher Loan Amounts

When you decide to work with banks, you can have access to the highest business loans in Singapore possible. However, it takes a lot of good credit to achieve this level of trust and confidence from banks and renowned financial institutions.

To develop good credit, you need to have exceptional performance in your credit history. If you’ve paid all your business loans in Singapore on time and in full consistently, banks will greatly prioritize providing you with financing.

Furthermore, almost every business loan in Singapore requires you to have immediate collateral to improve your chances of approval. Your collateral acts as a safety net on your behalf, especially if you fail to pay your loan within 5 years or by the term deadline in the future.

Longer Application Process

However, due to their collateral requirement, banks and other financing companies require it to take more time approving Singapore loan applications. In most cases, borrowers need to wait for a month or more to receive approval and the final details of their SME term loan.

In most cases, the long approval process is worth the trouble. With collateral, a business term loan has a drastically lower interest rate, longer-term loan, and high loan amounts available for borrowers. If SMEs can time their loan approval and release with collateral, they can quickly gain exceptional financing.

Credit Scores Are Necessary

Banks receive hundreds of thousands of loan applications on a regular basis. In this light, it’s extremely difficult for them to investigate thoroughly each borrower’s background for the proper provision of final interest rate and years of loan term repayment.

Credit scores allow them to de-prioritize and ultimately reject loan applications from individuals with poor performance with their loan in their previous repayment years. However, this standard will limit the loan options of borrowers with bad credit.

Higher Interest Rates

The EFS works alongside the Singapore government to deliver low-interest yet beneficial business loans. On average, both business and personal loans from banks have higher interest rates than usual.

While the working capital financing has a maximum of 3.5% interest, usual bank interests can range from 6-7%. Similar to EFS-issued financing, the final interest rate of emergency and regular business financing rates depend on the risk assessment of the lender.

Longer Repayment Terms

Borrowers have exceptionally-longer loan tenors with banks than moneylenders. However, borrowers can borrow higher loan amounts with banks. However, longer payment periods that can span years come with a serious cost — mostly with higher interest aside from the principal by the end of the loan tenor.


Modest Loan Amounts

Their cash reserves might be smaller, but moneylenders offer cash loan options enough to help start-up companies get back on their feet. Furthermore, they have a better interest than their corporate counterparts, which caps only at 4% for all financing types.

However, make sure you’re working with a legitimate moneylender registered with the Registry of Moneylenders and under supervision by the Ministry of Law.

Shorter and Faster Application Process

Moneylenders offer mostly modest loan amounts that are unsecured and without any need for collateral. In doing so, they can provide borrowers with faster loan application approvals, the fastest being less than a week or same-day approval once you submit all the required documents.

Credit Scores Have Zero Bearing

Furthermore, startup owners won’t need to submit credit scores for their financing. However, the lender will ask you for any income and expense data, which makes it somewhat a prerequisite to have at least 1-2 years of establishment in your respective industry. However, once you’ve established your financial situation, the lender will approve your financing in no time.
Shorter Repayment Terms

Loan tenors with moneylender loans are shorter when you compare them with bank rates. This is understandable because it has lower loan amounts. On average, you’ll need to pay your complete loan within the year or a year and a few months.

Business man with checking checkbox

What You’ll Need to Maximize Your Business Loan

Defined Business Plan

Both banks and moneylenders require you to establish your income and expenses data. Be sure to bring along data, documentation, and additional information that establishes your company’s performance within 1-2 years. Then, bring your plan of action that utilizes the money in a sensible way that illustrates your plan to repay banks and grow your commercial enterprise.

Maximum Amount You Can Borrow

Your maximum loan amount depends on your lender’s offered financial product or recommendation as your credit score affects. For moneylenders, it’s mostly the limit of their reserves that dictate the maximum amount you can borrow.

Full Understanding of Terms and Conditions

Most borrowers avoid having penalties with their loan repayments. However, some indications in most financing terms and conditions indicate some leniency when it comes to loan penalties, especially if you’re facing sales-making difficulties. Reading your full terms and conditions is crucial to maximizing your available loan amount.

Available Interest Rates

Use Loan Advisor and other comparison sites to help you find the best rates compatible with your current income and expense performance. Due to the competitive nature of providing financial assistance and the current Circuit Breaker’s economic impact, you might find lower interest rates available with many government-backed financial institutions. Unsure which interest rate is the best? Check out effective vs annual interest rate: what’s the difference?

Better Credit Scores

If you want to maximize your borrowing opportunities, you can use moneylender loans of any sort to improve your credit scores. Higher bank credit scores give you the best offers from banks. However, you’ll need to improve your income and stabilize your expenses to achieve this.

Documents to Support Your Borrower Credibility

Most moneylenders and banks will need you to have a business registered in Singapore and owned at least 30-50% by Singapore citizens.

Next, you’ll need to prove that you’ve been in Singapore doing business for over a year and have a minimum yearly profit of S$60,000.

To establish this, you’ll need to provide the following:

  • ALL Directors / Partners NRIC
  • Recent Information report (Business Profile) from the Accounting & Corporate Regulatory Authority (ACRA)
  • Recent Income tax assessment notice (Both personal & company)
  • Recent Financial Statement
  • Recent Invoices or Business Contracts
  • Recent Utility bills under the company name
  • Recent 6 months bank statements
  • List of Assets Own by the Company, Directors & Partners (If Any)
  • Office / Shop Tenancy Agreement (If Any)
  • Singpass (To Download IRAS NOA)

Finding Excellent Moneylenders Isn’t Difficult

If you’re looking to recover your credit or receive excellent loans for business, you won’t find it difficult if you use Loan Advisor for all your needs.

Receive up to 3 loan quotes for your business loan with Loan Advisor!

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