How to Apply for Small Business Loans in Singapore?

Small businesses are the building blocks of the world’s economy. Businesses today apply for loans for various reasons, the most likely is when they want to expand their business. Small businesses make up to 40% to GDP. These businesses have employed almost half of the global population which makes up for a great share in the world’s economy.

Businessman in Singapore

The pandemic outbreak in 2020 caused multiple unprecedented supply chain disruptions, labor shortages and liquidity shortages. Post Covid a good deal of Small business enterprises have turned to their government and banking sectors to assist shepherd them through difficult periods.

What is a Small Business Loan ?

Small business loan in Singapore qualify on the basis of growth potential of the small business, their ability to repay loans and the interest rates. However, taking a business loan can increase your company’s liquid assets and accelerate the growth of your small business.

There are numerous financial institutions in Singapore that help small businesses and enterprises to expand. In addition they offer some of the best in-house small business loans to these enterprises. The small business loans in Singapore are collateral free and have simplified requirements.

Why Consider Applying for Small Business Loans?

Small business loans cost cheaper than other credit sources. Hence they’re cheaper, affordable and reliable for many young surviving businesses. There is no borrowing, no cheats and frauds, only a real commitment with an official financial body of the country.

Let’s have a finer study on how, where and when should you apply for small business loan.

How to Apply for Small Business Loans ?

Before applying for any small business loan in Singapore your business must be ACRA-registered.

What is an ACRA Registration?

ACRA is known as Accounting and corporate regulatory authority is a regulatory national body consisting of business entities, public accountants and corporate service providers. Any small business that has from 8-10 employees working then they should register with ACRA. Benefits of ACRA registrations are:

  1. Public members find it easy to search and verify the business and their owner.
  2. Customers can verify your businesses and transact with your business.
  3. You can secure intellectual property and participate in tenders provided by the government
  4. Businesses can access government funding by Enterprise Singapore.

What are The Available Options?

There are multiple financing options for small business loans in Singapore.

Invoice Financing

One of the options is invoice financing.

Invoice financing helps the businesses to rely on quick cash generated by the institution and the respective business receives 90% of the invoice amount. However to bridge, or increase the cash flow might that might otherwise be trapped under the unpaid invoices due to unpaid or delayed payments. Invoice financing is a reliable, easy and cash-flow friendly solution which requires capital loan for a shorter period of time and instantly.

To apply for small business loan under invoice financing you need the following requirements:

  1. Bank statements from the past 6 months
  2. The managerial account/management account and Financial statements for over the past 1 year
  3. CBS (Credit bureau statement) of the past one year or the personal guarantor
  4. Notice of assessment of the personal guarantor from the past 1 year.

The interest rates start from as low as 0.5% per month.

Benefits of Invoice financing:

  1. Invoice financing unlocks capital trapped in the unpaid invoices.
  2. In invoice financing where you require funds to capitalize on the newer business opportunities.
  3. The big time advantage of invoice financing provides flexibility to finance invoices as and when you need, at any time of the month.
  4. The short term capital provided by top-up banking financial institutions.

Micro-loan

Micro-loans are the government assisted funding schemes for small businesses. They provide risk sharing with the financial institutions and participating banks that can assist you along with providing up to 100K for the working capital for your business.

The microloan for small business loan will qualify if it meets the needed eligibility. The eligibility required are Your business should be registered and operational in Singapore. Their annual sales turnover should be less than or equal to 1 million SGD and should be less than 10 employees.

Your business should be a minimum 30% with local shareholding or Permanent residency.

Microloans are not given to people with high incomes. Certainly people who are low-income and are unemployed can apply for these small bank loans. Small bank loans providers provide a range of services like bank checking and saving accounts, startup capital account for young starting startups, cash-flow management in technical and accounting firms.

Conclusion

Even though you can easily obtain a loan from professional lenders, with that also you will have to give them an array of personal details like your future growth plans, and personal financial information.

Small businesses usually don’t have much assets and their main assets lie in their receivables. About 60% to 70% of their receivables are tied down to cash flow. Hence opting for a small business loan can be a wonderful start for the company.

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