How Long Is A Small Business Loan Term In Singapore?
If you are a business owner, you can probably recall the many times you’ve needed extra funds for your business to remain afloat.
Occasional emergencies need funds. Sometimes you want to explore new opportunities in your business. Other times, you want to increase cashflow or buy new assets and inventory for your company.
SME business loans Singapore provide the extra money you need for your company to continue operating. Depending on the loan amount and interest rates, you’ll pay monthly installments until the loan is fully repaid.
But one important aspect to consider when applying for a business loan is to know how long is a small business loan term.
In this article, we’ll give you detailed information on how long is a small business loan term and the types of loans available to small businesses.
What Are Small SME Business Loans?
SME business loans Singapore, also called small business loans, are the financing options lenders in Singapore provide to small and medium-sized enterprises (SMEs) to meet their needs.
These loans are typically offered by banks and other financial institutions. They can be used for a variety of purposes such as purchasing equipment and premises, or expanding operations.
They may also come in the form of short-term loans or lines of credit, which provide businesses with flexible access to funds as needed.
But how long is a small business loan term? Business loans in Singapore can be long-term with a tenure of up to 30 years, or short-term loans of three to 18 months.
What Are The Business Loan Options In Singapore?
There are many SME loans in Singapore that can meet a company’s needs.
Before taking a business loan, have a clear purpose that matches the loan type you want, and know how long is a small business loan term.
Here are some common business loans in Singapore.
Also called a business first loan, a start-up loan is a government-financed loan scheme for new or young businesses of at least six months to two years old.
Start-up loans require the business to be registered and running for the last six months. The loan amount can be up to $100,000, and the loan tenure ranges from one to five years.
The Singapore government provides trade loans under the Enhanced Enterprise Financing scheme for businesses until 31 Mar 2023.
Since it’s a government-financed loan, the government takes 70% risk if the borrower defaults. Trade loans are used for inventory or stock purchases, and to access revolving or overseas working capital.
The maximum loan tenure is one year, and the maximum loan quantum is $10 million.
SME Working Capital Loan
A working capital loan is a government-financed loan (the government takes 50% risk) that provides operational cashflow to businesses with less than 200 employees. The business must have been running for at least two years.
Working capital loans are also ideal for businesses that are looking at new exploration opportunities. The repayment period is up to five years.
Since it’s a government-financed loan, the business must be a local SME and have at least 30% of shareholders who are Singapore citizens or permanent residents.
Equipment And Machinery Loan
An equipment and machinery loan is a type of fixed asset loan financed by the government under the Enterprise Financing scheme (EFS).
The loan is provided to businesses that want to purchase used or new assets for automation or upgrading. The maximum loan quantum is $30 million.
Invoice financing allows SMEs to borrow against their unpaid customer or sales invoices. A business can receive advanced money from banks using their yet-to-be-paid invoices from customers or sales.
Borrowers can take up to 80% of cash in their pending invoices to finance their daily operations.
Commercial Property Loan
A commercial property loan funds businesses wanting to build or purchase premises.
Companies can get up to 80% of the property’s value. A commercial property loan has a loan tenure of up to 30 years, which allows the business to make manageable monthly repayments until the loan is repaid.
How Long Is A Small Business Loan Term?
No matter the type of business loan you are interested in, it’s important to understand how long is a small business loan term. Small business loans have a loan term of as short as 30 days to 18 months.
In other words, SME loans can be short- or long-term. Short-term loans have a short repayment period.
For example, invoice financing has a repayment period of 30 to 120 days or until the invoices are paid. Trade loans have a tenure of one year.
On the other hand, long-term business loans have a repayment period of one year to 30 years. For example, a commercial property loan has a loan tenure of up to 30 years, while others, such as SME working capital loans, have a tenure of up to five years.
Since the repayment period varies, check the loan tenure with the bank you’re borrowing from before applying.
How And Where To Apply
Depending on your company’s circumstances, getting an SME loan Singapore is an excellent idea.
Once you have determined how long is a small business loan term, the next step is to consider where to obtain the loan and how to apply for it.
Here’s everything you need to know about how and where to apply for an SME business loan in Singapore. You can apply for small business loans from banks or licensed money lenders.
The first option is to get your small business loan from banks in Singapore.
While many banks in Singapore offer business loans, they have specific terms and conditions, loan tenures, fees, and interest rates that you must take note of.
Here is a table of common business loans* in Singapore, their interest rates, loan tenures, and the maximum borrowing limits.
|Name Of Bank||Type Of Loan||Interest Rate|
|Citibank||Unsecured business loan||6.25-15%|
|OCBC Bank||Business revolving short term loan||8.88-13.88%|
|Standard Chartered Bank||Installment business loan||11%|
|DBS Bank||Business term loan||7-11%|
*Information correct at time of publication
Licensed Money Lenders
Business loans from banks can be challenging to get, especially if you don’t meet the eligibility requirements.
That’s where licensed money lenders in Singapore, such as BST Credit, come in.
Since licensed money lenders are governed by the Ministry of Law, they cannot overcharge borrowers. So you can expect fair interest rates, flexible repayment periods, and loan amounts that suit your business.
How To Apply For A Business Loan In Singapore
So you now know how long is a small business loan term is. You have also determined your business financing need and matched it to the most suitable loan type. It’s time to apply for one.
Here’s a step-by-step guide for applying for a business loan in Singapore.
Shop For The Most Suitable Bank Or Money Lender
You can get a small business loan from banks or government-certified money lenders. Before choosing your loan provider, compare the different banks or lenders to find one that best suits your business’s financial needs.
Consider the maximum loan amount they can give you, the repayment period, monthly installment, interest rates and fees, and the terms and conditions.
Also, check the loan approval period, depending on how urgently you need the funds for your business.
Most banks take a few days up to two weeks to approve SME business loans in Singapore. On the other hand, licensed money lenders may take only a day to approve your application and disburse your funds.
Gather The Required Documents
After choosing a suitable bank or money lender to get your business loan from, confirm and prepare the documents needed during the application.
Here is a list of the most common documents required when applying for an SME loan in Singapore.
- NRICs of sole proprietors, partners, directors, and principals
- Operating business bank account statements for the past six months
- Business tax statements for the past year
- Professional documents or certificates that show your business identity and entity
- Businesses documents such as memorandums and articles of association
- Completed EFS application form (if your loan is government-financed)
Make your application online on the lender’s website and wait for the approval. During the application process, fill in the amount you want, and the loan tenure.
While the approval period varies depending on the lender, it usually takes a few days to two weeks, depending on the complexity of the loan you’re applying for and the number of active applications underway.
Check your loan application status from your loan provider’s website. If your loan is approved, you’ll get notified by your lender, after which the amount will be disbursed to you.
How Long Do You Need To Repay Your Small Business Loan?
SME loans in Singapore can be an ideal solution for SMEs, depending on their specific needs.
But before getting any loan for your business, consider how long is a small business loan term, the fees, interest rate, and the maximum borrowing limit.
A flexible repayment period will allow you to repay easily until your loan is fully paid.
Consider licensed money lender BST Credit if you cannot get your business loan from banks or financial institutions.