Do you need a business loan in Singapore? Well, luck you because you can apply for different business loans. Sometimes, a business loan is necessary if you need to boost your business or need working capital.
There is no better way of getting quick money to inject into your business than getting a business loan. However, you ought to determine the type of business loan you need even before you start to apply if you don’t know the types of business loans, worry not because here you will get to know everything.
Types of business loans in Singapore
There are different types of business loans you can apply for depending on your choice and the risks involved. No matter the type of loan you take, the main use is for business, whether it is paying busi9ness premises rent, adding stock, paying employees, or the general running of a business.
Therefore if you need a business loan, you ought to select which type you need among these six types of business loans in Singapore.
Unsecured business term loans
If you need business working capital for your business, the best type of loan to take is unsecured business term loans.
It is offered by law-approved banks and can be worth up to $300,000 for each bank. These loans will assist you in growing your firm and covering its operating expenses.
You can get a loan if you follow the proper processes laid out by bank legislation and use legitimate documentation. The advantage of this sort of loan over secured loans is that it does not require collateral.
Nevertheless, because it is a higher risk for the lender, its interest rates are very high. It’s also possible that the loan approval will take longer or not go through at all. You may want to attempt this loan because you may not have an asset to use as collateral as a foreigner.
Trade financing
Trading financing is a type of loan which essentially used to run trade globally. The loan entails an importer guaranteeing payment to an exporter. The importer can also rest certain that the items will be delivered safely once the money has been paid. As a result, it is beneficial to both groups.
It’s appropriate if you’re in charge of purchasing products from providers. You can send credit letters to vendors even if they are located in another country. This is also how inventories are financed. A trade finance instrument is a credit letter granted to an exporter.
It is used to provide payment assurance. It is widely accepted as a form of payment throughout the world. Import finance can be used to purchase supplies from other countries. This form of business loan is available from any local bank in your area.
As a result, if you plan to start a building, manufacturing, or engineering business in Singapore, trade finance will benefit you.
Equipment financing
Equipment financing is a type of loan deemed as a lease or hire purchase agreement. It is used to fund the purchase of fixed assets such as machinery and equipment. All businesses require equipment usage, whether it be office or production-related.
Some even require the use of machines. As a result, Singapore’s banks are an important source of this type of funding. You could also inquire about these things from hire buy companies. If you are not planning on staying in Singapore for an extended period, you should rent them from a leasing firm.
SME microloan
In 2016, the government created a financing scheme to assist local SMEs in obtaining funding. As a result, these loans are subsidized by the government. They can also be utilized as a source of working capital.
You may be able to get up to $100000. Singapore’s government has established nearly ten financial institutions to assist consumers on this platform. The interest rates on these loans vary depending on the lender. Contact partner banks for additional information on the rates and your eligibility to apply for a loan.
Property financing
Property financing is a loan meant to help businesses build offices or premises. The loan issued depends on your business type and what you would like to build or property you would ike to acquire for your business.
You can borrow money by pledging a property you already own to a bank. You can also receive a loan to purchase a new industrial or commercial property. As a foreigner, this may be difficult, but correct information on how to go about obtaining a loan can assist.
Working capital loan
In Singapore, a scheme was created to help SMEs with their working capital loan. It has now been updated to offer financing up to a maximum of $600000. This can aid in the expansion of your company. As a result, you can obtain this loan from any 14 financial institutions located throughout Singapore.
Their interest rates vary, so you should contact them for additional information if you require this loan. Again, as a foreigner, you may or may not be eligible for credit; it is your responsibility to check with banking institutions.
Qualifying Criteria for a Business Loan in Singapore
The most fundamental condition for an SME seeking a business loan in Singapore is that the company be locally registered and have at least 30% local ownership.
Many other circumstances and conditions will affect a company’s eligibility to qualify for a business loan, as lending rules vary amongst banks and financial institutions. As a business owner, you should be aware of the three important variables that can influence your loan eligibility:
Duration of business operations in Singapore
The steady a business is, the longer it has been in operation. If a company has been active for at least two years, most banks and financial institutions consider it reasonably stable.
New businesses looking for startup business loans can approach banks like DBS and OCBC for their initial company financing because their incorporation conditions are lax.
Annual turnover of the company
Banks prefer businesses with an annual turnover of S$300,000 or more. This is also used to assess how much money your organization is eligible for in a loan.
Credit Bureau Score
Lenders examine your credit report and personal credit history to assess your company’s loan amount as well as your capacity to repay the loan.
Find alternative funders like Peer to Peer or Business to Business lenders who will overlook negative credit ratings and focus on the SME’s short-term cash flow capabilities, such as ad-hoc factoring of soon-to-be realized bills, if your credit bureau rating is less than ideal.
The Bottom Line
If you’re a Singaporean, you have access to various business loan choices. Only make sure you assess the cost before taking a long time because some of them, such as unsecured loans, might cause you problems owing to their high-interest rates.
Singapore’s government has made it easy for you to conduct business in the country without worrying about money. All of the relevant sorts of company loans have been made available to you. There is no need to be concerned.
The better news is that it doesn’t matter whether your business is small or huge because there is one place where you can find the best loan lender for you even sme. You can get in touch with a lendingpot loan broker and will be linked to the best loan rendering institutions in Singapore Read more