Complete Guide To Short-Term Loans In Singapore


There may come a time when you find yourself in a situation where you need some cash to sort out an urgent financial matter. 

This unforeseen situation usually comes at a time you are not expecting your pay to be in time to meet that pressing need.

Your first thought may be to borrow from your friends or family members, which will, however, expose the state of your financial matters. 

This is where a short-term loan from your bank or a money lender can come in to fulfil your needs with the confidentiality you deserve.

In this article, let’s take you through how you can take a short-term loan from banks or from licensed money lenders in Singapore.

What Is A Short-Term Loan In Singapore?

A short-term loan in Singapore is a credit facility whose loan amounts are lower, ranging between $500 to $35,000. 

This type of loan is usually unsecured, which means you aren’t required to provide collateral or assets such as a car or property. Some financial institutions will refer to a short-term loan as cash advance, salary advance or fast loans among other terms.

Another feature of short-term loans is that you are required to repay the amount within a year. The repayments can be made monthly or you can pay off the amount on payday if your salary is adequate.

The determining factor in the lender’s review process is your credit history and annual income. 

Hence, the approval process is relatively faster, so that you get the funds in your account within the shortest time possible.

What Can I Use A Short-Term Loan For?

Unlike other term loans that require collateral and detailed financial appraisals, short-term loans are relatively easier to process. 

The eligibility criteria is designed to accommodate the needs of different customers. Hence, short-term loans can be used to meet different consumer needs as highlighted below: 

 Working Capital

This loan offers entrepreneurs quick cash to bridge a deficit when purchasing stock or paying for business expenses such as payroll, utility bills and rent. 

It comes in handy when you want to take advantage of an upcoming business boom like a holiday season and need a one-time unique inventory. 

You can thereafter repay the whole amount once you have made the sale.

Personal Needs

Some personal financial needs arise when we don’t expect them. If you don’t have adequate savings to cater to them, then you might find yourself in a tight corner.

If you are in employment and the pay isn’t sufficient to meet your urgent personal financial need, a short-term loan will save you the hassle. 

Such expenses include purchasing an important household asset, paying college fees for your child or even paying for a medical expense.

Pros And Cons Of A Short-Term Loan

A short-term loan can offer you temporary financial relief for your business or personal financial needs. 

However, before you apply for this loan from licensed money lenders in Singapore, it is prudent to first understand its pros and cons.

Pros Of A Short-Term Loan

Here are some benefits of a short-term loan: 

Quick Processing

A licensed money lender can offer an easy application and quick appraisal process. This allows you to apply for a short-term loan online either via its website or app.

Approvals are also quicker as there is no processing of collateral, which means you can access your loan within a day to meet your urgent needs. 

Easy Eligibility

Short-term loan lenders have less stringent checks, with most licensed money lenders focusing more on your annual income rather than your credit history. 

Hence, even when your credit score isn’t that good, you have a chance of getting credit.


Short-term loans generally offer flexible repayment options from weekly, payday, or monthly repayments to suit your cashflow. This prevents you from defaulting on your loan repayments.

Less Interest

The interest payable is lower since the period of the loan is shorter (at most one year). 

The limited tenure ensures you pay larger installments, reducing by large interest payments every month. In addition, the business or personal benefit you derive outweighs the interest charged.

Improves Your Credit Score

It’s possible to apply and repay short-term loans frequently. Each time you repay without defaulting, your credit rating improves. 

Over time, you will become eligible for higher loan amounts for a longer repayment period (long-term loan) from a traditional lender.

Cons Of A Short-Term Loan

That said, every loan comes with its pitfalls that you need to consider before signing up. Short-term loans are not exempt and even though they are easy-access loans, they also come with some cons: 

It Is More Expensive

As opposed to long-term loans, short-term loans have higher interest rates as they are considered high-risk credit facilities since they are unsecured. 

The short loan period may also result in high monthly payments when taking high amounts.

Higher Chance Of Default 

Due to frequent repayments, you may find it a challenge to honour your monthly payment if your income streams are inconsistent or get delayed. 

If that happens, your lender will charge you for the missed payment.

High Default Penalties

Just like the higher interest rate, the penalties for late payments are also more severe to discourage intentional non-payments. Remember, this loan is unsecured so your lender doesn’t want to take chances.

Easy To Get Into A Debt Cycle

If you take a short-term loan to meet a need that doesn’t generate income in return, you will be in a deficit every month for an amount equal to the installment. This may lead you to take top-up loans to satisfy that deficit.

In addition, if your income is constrained by other monthly obligations, you risk defaulting on payments, which can lead you to take a new loan to repay the original one.  

The never-ending debt cycle is also made more plausible due to the convenience and ease of applying for a fresh short-term loan.  

More on this Topic: 

What Are Monthly Installment Loans In Singapore?

Comprehensive Guide: What Can I Use A Personal Loan For & How To Apply?

What Is A Term Loan & The Repayment Schedule?

Where Can I Apply For A Short-Term Loan Quickly?

Since short-term loans are meant to help you fulfil an urgent need, reputable licensed money lenders in Singapore have devised systems and processes to ensure you get approval within a day. 

Rather than filling out multiple physical application forms, many of these lenders have also engineered platforms to offer an easy application and quick appraisal process. 

Such a platform allows you to apply for a short-term loan online either via the lender’s website or an app.

Online applications are appraised online and since credit scoring is also done online, the approval process is quicker. All you need to do is visit your lender’s website and submit your loan request.

Banks are another option to consider. Although they offer low interest rates on short-term loans, the approval process takes longer than that of licensed money lenders. 

Furthermore, when approving loans, banks place a greater emphasis on the borrower’s credit rating, which may reduce your chances of approval if you have a low credit score.

Hence, your best bet could be a licensed money lender like BST Credit, which can grant you a loan quickly with less hassle. 


Instead of turning to friends and family who might end up disappointing you, getting a short-term loan may be your best option. 

It’s a private way of requesting financial assistance from your bank or a licensed money lender. 

A short-term loan is not only easy to apply for and access but its repayment schedules are also flexible. 

However, always ensure you make repayments promptly as the penalties are high and will erode the financial benefits of getting the loan in the first place. 

Talk to the loan advisors at BST Credit today, or apply now to get started. It just takes minutes.

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