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Best Practices in Applying for a SME Loan in Singapore

18 January 2023

, posted by 

Aldean Moch Rafli


As a country known for its friendly business environment, Singapore offers a promising start for small and medium enterprises (SMEs). In fact, SMEs take up 99% of all businesses in Singapore. However, as a small business, it’s common to face tight finances and need extra capital. 

At this point, SME owners will usually look for a business loan. A loan helps SME owners to leverage business opportunities without losing momentum due to low capital. They can also gain working capital and use the loan for long-term requirements and essential business equipment. 

While there are many available loans that offer financial support for your SME, you need to be mindful when applying for an SME loan, especially if you have no prior experience in this area. Here are the best practices to help you apply for an SME loan in Singapore!

1. Get to know your options

In Singapore, there are various types of loans that SMEs can apply for. Here are some options to consider:

SME working capital loan

This type of loan is initiated by the Enterprise Financing Scheme (EFS) for businesses that need a greater access to working capital. It has low interest rates (3.75% – 4.25% p.a.) and charges based on a reducing balance model with a maximum loan of S$500,000 and a maximum repayment period of 5 years.

Temporary bridging loan

The Temporary Bridging Loan Programme (TBLP) provides a maximum funding of S$1 million with a repayment period of up to 5 years. To qualify for this loan, your business needs to be registered and physically present in Singapore, and at least 30% local equity must be held directly or indirectly by Singaporean(s) and/or Singapore PR(s).

Startup business loan

Also called the Business First Loan, this loan is meant for businesses that have operated for 6 months to 2 years, which is why it has a smaller loan amount: S$100,000. It is also a relatively easier loan to apply for.

Invoice financing

Invoice financing is a type of short-term loan in which SMEs convert up to 80% of unpaid invoices from customers or suppliers into cash. This way, they can get immediate cash flow, and only need to pay interest based on the used amount.

2. Learn your eligibility

Once you have narrowed down your options for your loan type, find out whether you are eligible to apply for that loan. For example, some loans require a certain percentage of shareholders to be Singaporean citizens or PRs. Your SME should also be registered and present in Singapore. Other requirements may include a certain number for annual sales, employment size, as well as period of time in which your business has operated.

3. Make sure to have a presentable credit score

To win the approval of lenders, you need to have a convincing personal credit history. Reasonably, lenders will look into your personal finances as it reflects whether you will be able to manage your SME’s finances and repay the loan in time. If you have a track record of missing bills and late loan payments, it will significantly reduce your chances of getting approved.

Before you apply for an SME loan, have a look at your credit report and check if there are any issues. Make sure you consistently meet your financial obligations.

4. Have a solid business proposal

Apart from your financial history, lenders will also look into your business proposal to see if you have a clear business goal with feasible strategies. Some important points to include in your business proposal are an executive summary, market analysis, marketing methodology, organisation chart, and financial projections. You should also show clearly how you’re planning to use the loan and how it will help you earn your profits. If the lender sees that you have a solid plan to run your business, they’re more likely to approve your loan.

5. Include your professional resume

Make your potential lenders more confident in approving your loan by showcasing your experience and expertise. A concise resume with your professional experience, skills, and achievements will show that you have ample qualifications to run your SME.

6. Prepare the necessary documents

Once you have picked the SME loan scheme that best suits you, you need to prepare the required documents to complete your application. These are some of the documents that you may need to prepare:

  • Your company’s bank statements and financial reports
  • Director’s IC copy and Notice of Assessment
  • Proof of director’s personal income
  • GST Form 5 (a document containing your income tax details)
  • Debtors and creditors ageing list

7. Pick the most suitable lender

Financial institutions which offer a loan for SMEs can be grouped into several categories, namely banks, non-banks, and peer-to-peer lending. While many SME owners might be interested in borrowing from banks, it is important to know that bank loans usually have lower approval rates due to a stricter selection process, which considers your revenue, credit score, business age, and profitability ratio. 

Apart from banks, there are also other financial institutions that offer SME loans with a higher chance of approval. Another option is peer-to-peer lending platforms, which connect SME owners with individual investors who analyse their eligibility and issue a loan for a certain interest of the loan amount. 

For example, Fazz Business provides business financing solutions for SMEs to established companies alike. With access to extra capital, SMEs can solve large cash flow gaps and expand operations to run your business more effectively and seize more business opportunities.


Those are the best practices that you can follow when applying for a SME loan in Singapore. Be sure to familiarize yourself with the loan options as well as eligibility requirements so that you get a higher chance of approval. 

To learn more, be sure check out our article on tips to boost your chances of getting your business loan approved here.

Grow your business with a Fazz Business Loan

If you are an SME owner looking for a loan to start or expand your operations, Fazz Business is here for you. We help SMEs accelerate their business growth with ready access to working capital. Gain capital support to close your cash flow gaps and capitalize on growth opportunities to fund your business operations with short-term loans of 6 to 12 months tenure. Daily interest rates start as low as 0.05% with approval within 48 hours. 

Head over here for more business financing solutions, customised to fit your business needs.


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