SME Loan In Singapore
Money

How To Apply For A SME Loan In Singapore?

The economy of Singapore is fuelled by small and medium-sized businesses, which account for nearly half of the country’s businesses. As a result, SME funding makes up a sizable portion of the company financing industry, with businesses receiving working capital through a variety of SME loan items.

Aside from conventional banks and other financial institutions, which still provide the bulk of business loans in Singapore, financial technology (FinTech) is gaining traction as a viable alternative source of capital.

Crowdfunding and peer-to-peer lending services are also open, making the donation process much simpler and faster. These financial technology companies are causing a stir among Singapore’s small and medium enterprises.

Banks and financial institutions have grown and advanced as a result of technological adoption, and their applications and operations have become faster and more reliable as a result of automation.

To be eligible for SME loans, you just need to plan your application in such a way that it meets all of the requirements.

The below is a step-by-step guide to applying for an SME loan application:

  • Creating a comprehensive strategic strategy

Many banks and moneylenders would need a solid financial strategy, which will serve as an introduction to who you are and what you do.

Prepare to state the company’s priorities, purpose, and how you intend to operate it to meet all of the listed goals.

A strong strategic strategy indicates that the company is going to prosper in the eyes of the investor.

  • ​ Describe how you want to spend your money

Moneylenders typically want to see if you intend to repay the loan you took out. You should apply for an equipment loan if you intend to use the money to purchase equipment.

You may even apply for a short-term loan if the aim is to keep the company going before the debtors pay you.

It is simpler for the moneylender to decide if the amount requested will satisfy any of your conditions if you mention what the loan will be used.

  • Specifying the amount of money you’ll need

Be sure you do your homework to avoid underestimating or overestimating the amount of money you’ll need.

If you undervalue the number, you will face financial difficulties in the future. Overestimating causes the bank or financial institution to doubt whether you conducted a thorough analysis prior to drafting your business plan.

  • Keep your credit score in fine shape

Though some approved moneylenders will give you a loan even if you have a poor credit score, it is preferable to have a good credit score.

Furthermore, both banks are also expected to check that each borrower is qualified for a loan. As a result, make sure to review your credit reports and ratings.

Maintaining a credit score of at least CC is also recommended. Credit grades in Singapore vary from AA to HH, with AA being the highest.

  • Examining all of the financing choices

If you’ve determined that your credit score is appropriate, you’ll need to conduct research and compile a list of banks, moneylenders, and financial institutions in Singapore that will provide you with the loan you need.

Choose one that provides low-interest loans with the most lenient acceptance requirements.

  • Keeping accurate financial statements

Maintaining proper financial statements would make it simpler if you are applying for a business loan, particularly from a bank.

To determine if you have the ability to pay back, banks and other financial institutions may examine your balance sheet, statement of cash flows, and financial information.

It’s time to start keeping these notes if you haven’t already. They could come in handy if you need a loan in the future.

  • Making an appointment and planning a meeting 

Be sure you view your application for a small business loan in the best way possible if you really want the mortgage lender at your finance company to accept it and give it a second glance.

It’s critical to prepare a presentation of your business strategy and application, as well as a technical kit that includes a narrative, the necessary financial statements, spreadsheets, maps, and an executive summary.

Have an Executive Summary as well, as many loan officers look at the Executive Summary first to see if they’re involved. Make an appointment with your mortgage lender and request enough time to give a brief presentation based on the business plan, complete with visual aids. Be succinct and structured when doing so.

As you can see, securing an SME loan in Singapore is not a difficult task. And with so many financial firms, banks, and moneylenders out there, you are bound to find one that will be willing to finance you and meet your needs. Simply make sure you have a solid business strategy in place, decide how you’ll invest your money, and estimate the sum you’ll need accurately.

Furthermore, maintaining a decent credit score is critical at all times. Credit Bureau Singapore charges a processing fee of $6.42 to verify your credit score. Only take out what you can afford to repay in time, so don’t undervalue the amount to avoid a potential financial crisis.

What is the SME loan rates Singapore?

  • The effective interest rate for an unsecured business term loan ranges from 8% to 12% per annum.
  • Government lending projects have an average interest rate of about 7% to 9% per annum.
  • Secured loans for vehicles and machinery include a flat rate of interest ranging from 2% to 7% per annum.
  • The effective rate for revolving facilities such as trade lending and factoring is between 6% and 9% per annum.
  • Property lending is the most cost-effective mode of financing, with interest rates ranging from 2% to 4% p.a.

Different banks have different interest rates. In general, interest is measured by the borrower’s credit score, the debt amount, and whether the loan is collateralised.

The interest rates on most Singapore business loans are determined on a monthly reducing rest basis, with the principal debt amortised over the loan term.