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How to Find the Best SME Micro Loan in Singapore

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At one point in their operation, SMEs operating in Singapore are likely to have applied for or knew about an SME micro loan. Designed for SMEs seeking ways to fuel their operation with a small boost, an SME micro loan provides a convenient way to acquire funds instantly.

Learn more about Raise Start-Up Funding For Businesses In Singapore.

What is a SME Micro Loan?

An SME micro loan is an unsecured working capital loan program that can help with your business’ cash flow and other expenses by providing a line of credit. A micro loan is usually a short term loan being managed by Enterprise Singapore, a government institution. It is a government-assisted type of loan program (through a risk share percentage) that allows businesses to access and borrow a relatively smaller amount compared to working capital loans, which can be perfect for giving a slight boost for small to medium enterprises and businesses while making it easier to repay and can help with building a good credit history with smaller loans. 

Which financial institutions are participating in micro loans?

Here’s the list of financial institutions and companies that offer an SME micro loan financing scheme, acting as partners with Enterprise Singapore:

  • DBS
  • IFS Capital
  • OCBC
  • Ethoz Capital
  • Maybank
  • RHB
  • Hong Leong Finance
  • Orix Leasing
  • UOB

Suppose you have questions or you want to acquire more information. In that case, you may access their respective offices and websites to inquire about their different financing schemes and loan options, designed for businesses’ various financing needs. 

How much can you borrow?

For an SME micro loan, the maximum loan quantum is up to S$100,000.

How to qualify?

Here are the eligibility criteria for an SME micro loan:

-Business registered and operating in Singapore for at least 6 months, with at least 30 local shareholdings percentage

-Annual sales, not more than 1 million SGD/group employment size of at least 10 employees.

Things to consider when choosing a loan

Besides basic concepts such as the maximum loan quantity and interest rate, more factors that a business company registered and locally operating must check and consider.

Loan amount

Generally, financial institutions will indicate the limit for loans in their information sheets and sites, along with their interest rates. However, this does not mean that you should max out the amount in your application form. As a business owner, you must think carefully and consider your capability to repay your debts and your confidence in your capability to do so. In the context of an SME micro loan as an unsecured loan, this can greatly affect your SME company credit score and can hamper your succeeding loan applications in the future. 

Loan tenure

Loan tenure means how long your repayment period will be. Together with interest rates, it may be counted in months or years (ex. 6 months, 2 years, 5 years, etc.). Take note that a longer loan tenure will accrue more interest given how many months or years (depending on whether the interest rate adds up monthly or yearly) will pass before the final repayment deadline is reached, compared with a shorter one. Also, note that the repayment period limit for SME micro loans is 4 years, which you should consider before availing of this financing service.

Fees and charges

Depending on what type of loan is being availed, there can be other fees and charges aside from interest rates in the loan application and repayment process. Various financing institutions also have their terms and regulations for these fees and charges, resulting in different fees and charges for every respective financing institution.

Processing fee/origination fee

This fee is derived as a percentage of the total loan quantum; in short, the higher the loan amount, the higher the fee. The rationale for this fee is that it is charged as compensation for the time and effort used by financing institutions and banks in the assessment process, including a risk assessment process and a credit score assessment. They may also check up to 2 years’ worth of your business (ex. annual sales, credit history, etc.). This fee commonly ranges from 1% to 3% of the final approved loan and can go up to 4% to 5% for P2P Singapore crowdfunding platform lenders.

Annual fee/account maintenance fee

This fee is charged for maintaining credit facilities with financing institutions such as banks and money lending companies. If you own a credit card, for example, then you already encountered this type of fee. It usually appears in revolving credit lines, which commonly requires a yearly credit review and monitoring. This fee’s rate range is between $500 to $3,000 for most line limits below $1M.

Credit insurance fee

This fee is charged for credit facilities that require separate insurance coverage, such as those sourced to third-party credit insurers. Suppose the SME business’s credit facility is applied under the Loan Insurance Scheme of Enterprise Singapore, a government institution. In that case, they will be assisted by Enterprise Singapore with a portion of their credit insurance premium. For example, a trade finance credit facility often requires an annual credit insurance fee that rates between 0.75% to 1.5% of the credit line.

Legal fees

This fee is commonly found in complex loan facilities, such as the loans that require collateral. The range of these particular fee rates between $2,500 to $5,000 depends on how large and complex the loans are. 

Early repayment penalty fee

A fee charged as compensation for the loss in interest rate income because of early repayment, banks usually have an early repayment penalty fee between 2% to 5% of the total principal, depending on their particular scheme. You need to check the details for this fee because some banks will opt to compute the fee using the original principal and consider the loan tenure instead of using the redeemed outstanding principal. However, some participating financial institutions allow early repayment of an SME micro loan without any corresponding penalty fees, subject to the corresponding lender’s information and details in their repayment options. (Ex. With a tenure of 5 years, repaying after 6 months will force you to pay a penalty fee that includes the total interest rate of the 5 years tenure, rather than using the existing interest rate accumulation within 6 months)

Banking fee

In the disbursement of approved loans financing, companies and institutions may require opening a bank account with them, which entails their respective banking fees and acquiring these loans, as mentioned earlier. If you are trying to apply for a bank loan, you may encounter this fee as well. Check this fee whenever applicable, as well as details about the monthly minimum balance for their accounts. Dropping below the minimum balance prescribed may also entail its penalty fee.

Processing time

The application process for SME micro loan applications can take as fast as 3-5 working days and can also take as long as 2-4 weeks, depending on the financial institution providing the service. Usually, if the loan application is already approved, you can get the money on the day of approval itself. Take this into account to plan out when to make a transaction for a more convenient process.

Compare through Loan Advisor

Loan Advisor Singapore is a trusted and reliable site that helps borrowers compare financing services provided by various money lending companies, such as their interest rates, maximum loanable amount, and different kinds of loans so that SME business owners can check which company is more appropriate for their needs. With their up-to-date database, there is a guarantee of accuracy in the information that they provide.

SMEs should try to use the previous factors mentioned and look at the differences in these factors seen across the financial institutions. This will help businesses in choosing as to which business company they will transact with. 

What’s the best interest rate for a micro loan? 

Usually, the interest rate for an SME Micro Loan ranges between 6% to 8.75% per annum, which is dependent on the results of the risk assessment process conducted by the financing institution involved. However, businesses need to check with every financing institution offering this particular service and compare their offers and loans.


An SME micro loan helps businesses want to boost their business operations by a small margin and improve their credit track record. Like all types of loans such as business loans and capital loans, an SME micro loan can also help provide financing options for regular expenses for SME businesses, such as providing access to projects funding and improving the company sales turnover. 

In short, the benefits of various business loans such as this is very helpful for a budding SME company and its operations in entirety. Before applying, make sure that your business or company meets the eligibility criteria. Businesses must have operated at least 6 months, with at least 30 local shareholdings percentage. Their annual sales are not more than 1 million SGD, or they have a group employment size of at least 10 employees. Take note of the terms and conditions, as well as the numerical details, before transacting and starting your application process.

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