If you are a small and medium-sized enterprise (SME) business owner in Singapore, you will most likely require business financing at some point in your business journey. Business loans in Singapore can be used to expand your business, plug working capital gaps, finance inventory purchases, commercial property rental, or purchases.

Government-Assisted Business Loan Schemes (Working Capital Loan & Temporary Bridging Loan Programme)

Government-assisted business loans schemes in Singapore were introduced in 2020 during the height of the COVID-19 pandemic as a way for the government to support enterprises in Singapore.

These loans, administered by Enterprise Singapore (ESG) and their participating financial institutions (PFIs), are attractive to SMEs as they include a government risk-share of up to 90%.

ESG currently offers 3 main credit facilities:

• Enterprise Financing Scheme – SME Working Capital Loan (EFS – WCL)
  • Max loan quantum S$1 million
  • Government risk-share of 90%
  • Only available for SMEs
• Enterprise Financing Scheme –  Trade Loan (EFS – TL)
  • Max loan quantum of S$10 million
  • Government risk-share of 90%
• Temporary Bridging Loan Programme (TBLP)
  • Max loan quantum of S$5 million
  • Government risk-share of 90%

Unsecured Business Term Loan

Unsecured business term loans are not secured by physical collateral, such as property or equipment, but by company directors’ guarantees. There is also good at money lending in toa Payoh central

These loans are popular amongst SMEs due to their flexibility. They can be used to fund their daily operational needs such as inventory purchases and payroll or to finance business expansion plans such as leasing a new retail outlet.

Evaluation Criteria

Financial institutions will evaluate a company holistically based on its past financial performance, current bank statement records. They will also take into account the guarantors’ credit records.

Structure

A typical unsecured business term loan funds up to $500,000 with a repayment period of 1-5 years.

The interest rate chargeable ranges from 7% to 12% per annum and administration fees are levied at 1% to 5% of the approved loan amount.

Unsecured business term loans usually have a “Principal + Interest” repayment pattern. However, for exceptional cases, these term loans may also have an “Interest Servicing Only + Bullet Repayment” repayment pattern.

The loan amount, tenor, charges, and repayment schedules vary across different institutions. It is important to choose an unsecured business term loan that is affordable to you and at the same time, solves your business needs.

Merchant Cash Advance

Merchant Cash Advance (MCA) is a niche financing product that is only available to retail or F&B businesses that use credit card terminals.

Themain evaluation criteria for an MCA facility are the SME’scredit card transactions over the last 6 months.

The financials, profitability, and guarantors of the SME will play a smaller role and be evaluated only if the SME requests for a larger-than-usual loan amount.

Borrowing from a Singapore-licensed legal money lender is essential. Requesting for a loan from a certified moneylender comes with a slew of advantages. Applying for a loan from illegal businesses comes with a slew of issues, notably harassment and relatively high rates of interest. Consider IP Credit, a certified money lender, good at money lending in Toa Payoh Central, for affordable interest rates for loans.

Never settle for a money lender who does not have a legal license, even if it seems like the last option in a severe financial crisis. Before deciding on a desired money lender, it’s critical to complete your homework. Here are some of the benefits of getting a licensed money lender in Singapore.

Harassment Laws

During the loan’s maturity period, shady money lenders would hound a client. In Singapore, a licensed moneylender must adhere to the government’s tight restrictions for the business. Violations of these restrictions can result in a jail sentence, license revocation, and monetary penalties. As a result, the competent moneylender will make certain that your rights are safeguarded throughout the procedure. Professional moneylenders in Singapore will counsel you on how to correctly handle your finances so that you may meet your payback obligations.

Efficiency

Your blemished credit score should be the last thing on your mind while applying for a licensed money lender loan. You won’t have to worry about long and drawn-out regulatory approvals if you borrow from a legal money lender because of their efficiency. The money is yours to keep once you have completed all of the relevant documentation and your request has been accepted. Your loan application will be reviewed and processed immediately by licensed moneylenders. In some situations, you may be able to acquire a loan within an hour of being at their office.

Low Interest Rates

Unlicensed moneylenders will charge you extraordinary interest rates. Shady money lenders usually set their own interest rates. This is not the best way to secure a loan because you will wind up spending a lot of money in the long term. Licensed moneylenders, on the other hand, are registered moneylenders. As a result, they will adhere to the stated interest rate. The guidelines are followed by licenced and trustworthy moneylenders because breaking it has serious implications. The interest rates charged by licensed moneylenders are quite low. IP Credit has one of Singapore’s most affordable interest rates.