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Guide to Best Start Up Business Loans in Singapore (2022)

start up business loan Singapore
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Singapore gives aid to any start-up business because it prioritizes innovations and technology-based solutions in upgrading its existing systems and technology. Financial institutions in the country heed and examine the many innovations that stem from the country.

In doing so, they respond with many varieties of business loans in Singapore. A start-up Singapore business loan is a micro-loan for individuals with compelling ideas but requires a financial springboard to bring them to life. Here is everything you need to know about them.

 

What is a Start Up Business Loan Singapore?

The typical business loan can be quite expensive for a typical startup. With this in mind, the country’s financiers create a unique line of Singapore business loans that give micro or start-up businesses lower interest rates and loan amounts with a minimum of S $100 000 to jump-start their new business. All small businesses in Singapore can now have adequate working capital thanks to startup business loans.

Conventional business loans provide a business owner an average of S $5 million, which they will need to pay for at least half a decade. However, micro-business owners that only require sufficient capital without lengthy payment periods and high-interest benefit greatly from startup-oriented loans.

 

List of The Startup Business Loan Options in Singapore

If you’re planning to establish your brand in Singapore, you have plenty of financing options. Just make sure to fulfill all the requirements each financial institution requires from you, and you’re good to go.

Here is a list of all the start-up loans available in Singapore:

Name of Loan Maximum Loan Amount Loan Tenure Interest and fees Eligibility Apply at
SME Working Capital S$1 million Up to 5 years Depends on bank or financial institution Business must be registered and physically present in Singapore.

At least 30% owned locally.

Maximum borrower group cap of S$500 million.

Maximum group revenue of S$100 million or 200 employees.

Banks: CIMB, DBS, HSBC, MayBank, OCBC, Resona Merchant Bank Asia, RHB, Standard Chartered, UOB

FIs: Ethoz Capital, Hong Leong Finance, IFS Capital, ORIX Leasing, Sing Investments & Finance, Singapura Finance

Temporary Bridging Loan S$5 million Up to 5 years Up to 5% per annum Business must be registered and physically present in Singapore.

At least 30% owned locally.

Banks: CIMB, DBS, HSBC, MayBank, OCBC, Resona Merchant Bank Asia, RHB, Standard Chartered, UOB

FIs: Ethoz Capital, Hong Leong Finance, IFS Capital, ORIX Leasing, Sing Investments & Finance, Singapura Finance

OCBC Business First Loan S$100,000 Up to 4 years Per bank assessment Business must be registered and physically present in Singapore 6 – 24 months.

At least 30% owned locally.

No more than 10 employees or annual turnover less than S$1 million.

At least 1 guarantor Singaporean or PR between 21 to 62 with min annual income of S$30,000.

OCBC
UOB SME Loan S$100,000 Up to 3 years Per bank assessment Business must be registered and physically present in Singapore at least 12 months.

At least 30% owned locally, and more than 50% equity owned by individuals.

No more than 200 employees or annual turnover less than S$100 million.

UOB
DBS Digital Business Loan S$200,000 Up to 5 years Per bank assessment Business must be registered and physically present in Singapore.

At least 30% owned locally.

DBS
StanChart Business Installment Loan S$300,000 Up to 3 years Up to 11% per annum

Default fee: S$100

Business must be registered and physically present in Singapore at least 36 months.

At least 30% owned locally.

Minimum turnover of S$750,000 per annum.

Standard Chartered
UOB BizMoney Loan S$350,000 Up to 5 years 10.88% per annum

2% facility rate

S$500 annual fee

Business must be registered and physically present in Singapore for at least 36 months. UOB
Maybank Business Term Loan S$500,000 Up to 5 years Per bank assessment Business must be registered and physically present in Singapore for at least 36 months.

At least 30% owned locally.

Minimum turnover of S$300,000 per annum.

MayBank

 

Here are some brief explanations about each startup business financing.

SME Working Capital Loan

The Singapore government announced the SME Working Capital to help cope with COVID19’s economic effects. It uses the country’s Solidarity Budget as its main source.

SME Working Capital allows Enterprise Singapore to take on 90% of a startup’s risk.

Temporary Bridging Loan

This government-assisted scheme provides financing to startups and businesses that need digital transition funds or other upgrades that will help them stem COVID19’s damage to their income. Once again, Enterprise Singapore can take on 90% of the business’ risk.

OCBC Business First Loan

Businesses can receive S $100,000 from OCBC and repay it within 4 years. However, the bank will assess the business’ risk factor that plays a huge role in its interest rate.

UOB SME Loan

UOB gives businesses up to S $100,000 with a maximum repayment period of 3 years. One-year-old businesses are the most qualified. Your own business shouldn’t have more than 200 employees and have an annual turnover under S $100 million.

DBS Digital Business Loan

DBS offers one of the biggest loans for startups at S $200,000 with a 5-year repayment period. The bank works with the government’s Resilience Budget. Plus, you can pay the interest alone during the loan’s first year.

Standard Chartered Business Installment Loan

SC offers S $70,000- S $300,000 without collateral to startup loans. You can pay the entire financing between 1-3 years with an EIR cap of 11%. It’s up to Standard Chartered’s evaluators to provide the accurate EIR figure for per company

UOB BizMoney Loan

UOB Bizmoney has one of the biggest loan caps at S $350,000 with a repayment period of 5 years with an EIR of 10.88% yearly. In addition, it has a 2% processing and S $500 annual fee.

Maybank Business Term Loan

Qualified businesses can receive up to S $500,000 from Maybank’s startup business loan. These businesses must be at least 3 years old and have a minimal annual turnover of S $300,000.

 

How Can a Financial Institutions’ Startup Business Loan Help Entrepreneurs?

Small business owners need just enough money to start operating. They use the money to pay for business licenses, employees, and other crucial items. Once they’ve overcome the jump-start business phase, small business loans can improve their cash flow, upgrade their equipment, facilities, and people, and expand their operations.

Below are three ways start-up loans are always sufficient for any business.

  1. Improve Cash Flow

Taking on start-up financing options for any startup company in Singapore is a juggling act. You’ll need to make sure you gain enough profits to pay for employee salaries, maintenance, utilities, and the loan. Once you’ve finished your loan repayments and broke even with your profits, you’ll encounter a short period of unstable cash flow.

When this happens, you can use a startup loan with a low-interest rate to stabilize your business cash flow. This extra cash will act as a safety net if you have emergency utility bills or logistical hiccups that can slow down your operations.

  1. Invest in Better Equipment, Facilities, and Personnel

Your small company is performing exceptionally well. Unfortunately, its equipment is starting to wear out. You can use a start-up loan to finance new, longer-lasting, and better-performing equipment. Additionally, if you’re having some turnovers, additional cash can help you find new personnel too.

Furthermore, if your operations need you to have additional equipment that will not fit your existing facility, a startup loan can help you deal with the initial expenses of leasing a new headquarters or operating property.

  1. Expand and Take Business To The Next Level

Seizing opportunities is difficult when you’re low on cash. With a startup loan from banks, you can make timely investments that ultimately lead to your business’ growth. Truthfully, many successful investors rely on savings and wealth they’ve accumulated to expand and improve their business portfolio.

For example, seizing a timed lease discount on a prime location leaves your business no time to accumulate enough just to avoid debts. With an SME micro loan, you receive enough cash inclusive of interest you can manage. You can worry about saving enough to pay for your existing loan later.

businessmen discussing on taking loan

 

Requirements and Eligibility To Have a Startup Business Loan

Singapore is one of the most startup-friendly countries in the world. However, despite easy access to small company financing, it lays down some strict requirements. In doing so, it safeguards the abuse of financial institutions and borrowers at the same time. Here are all the essential requirements and eligibility to use Singapore’s small company-friendly unsecured loan:

Eligibility

  • Registered Business in Singapore
  • Operational For More Than One Year
  • Minimum Annual Turnover of S $60,000

Documents

Once you’ve chosen the loan provider you’ll work with, make sure you prepare all these documents. The sooner you can provide these documents, the shorter your application waiting period approval.

  • NRIC of Directors and Partners
  • Recent Business Profile data from Accounting and Corporate Regulatory
  • Recent income tax assessment notice (both business owners and company tax assessments)
  • Recent financial statement
  • Recent invoices and business contracts
  • Recent utility bills under the company’s name
  • Recent 6-month bank statements
  • All assets the company, directors, and partners own
  • Office or shop tenancy agreement

 

How to Find the Best Startup Business Loan in Singapore ?

It can be dizzying to find the best startup loan. You might find that you’ll need to decide between at least 30 financial products to find the best working capital loan for your growing company. Here are the three best ways to find the best financing in Singapore.

  1. Shop Around

It’s a challenging task, but shopping around is the best way to find SME loans with competitive interest rates. Once you’ve found the perfect loan amount suitable for your monthly income, consider the best interest rate per year with flexible repayment terms that suits your cash flow.

  1. There Are Many Alternatives to Banks

If you’re planning a startup to get out of debt, most banks will usually limit or ultimately reject your business loan application. In such a case, you can count on other financing institutions to help you. Trade unions and licensed moneylenders in Singapore provide business loan options to individuals they deem trustworthy.

  1. Narrowing Down Your Moneylender Choices

While moneylenders might not have the deepest sources of funds or credit cards, they’re an excellent option for individuals who just need adequate funding for their expansion plans. However, make sure you’re working with reliable money lenders Singapore you can find in the Registry of Moneylenders.

 

Can I Use a Business Loan as a Startup Loan?

Any business that can comply with any financial institution’s requirements and repay their regular monthly repayments can use business loans as startup loans. However, some startup businesses on a shoestring budget have less than a year of establishment and highly likely earn less than their regular monthly dues.

 

How Do Startups Traditionally Get Financing?

Startups work with Enterprise Singapore or Angel Investors who are compelled by the business’ idea. In doing so, they get enough financing to purchase resources that can take their business’ performance to the next level.

If you’re having trouble comparing so many moneylenders, you can use Loan Advisor’s advanced search algorithms and filters to find the perfect startup loan. Learn more about how we can help you find the perfect financing for your small business needs.

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