{"id":8489,"date":"2023-01-18T14:22:13","date_gmt":"2023-01-18T07:22:13","guid":{"rendered":"https:\/\/fazz.com\/?p=8489"},"modified":"2024-02-21T12:45:07","modified_gmt":"2024-02-21T05:45:07","slug":"apply-for-sme-loan-singapore","status":"publish","type":"post","link":"https:\/\/fazz.com\/newsroom\/business\/apply-for-sme-loan-singapore\/","title":{"rendered":"Best Practices in Applying for a SME Loan in Singapore"},"content":{"rendered":"\n

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<\/a>. However, as a small business, it\u2019s common to face tight finances and need extra capital. <\/p>\n\n\n\n

At this point, SME owners will usually look for a business loan<\/a>. 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. <\/p>\n\n\n\n

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!<\/p>\n\n\n\n

1. Get to know your options<\/strong><\/h2>\n\n\n\n

In Singapore, there are various types of loans that SMEs can apply for. Here are some options to consider:<\/p>\n\n\n\n

SME working capital loan<\/h3>\n\n\n\n

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% \u2013 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.<\/p>\n\n\n\n

Temporary bridging loan<\/h3>\n\n\n\n

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).<\/p>\n\n\n\n

Startup business loan<\/h3>\n\n\n\n

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.<\/p>\n\n\n\n

Invoice financing<\/h3>\n\n\n\n

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.<\/p>\n\n\n\n

2. Learn your eligibility<\/strong><\/h2>\n\n\n\n

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.<\/p>\n\n\n\n

3. Make sure to have a presentable credit score<\/strong><\/h2>\n\n\n\n

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\u2019s 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.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

4. Have a solid business proposal<\/strong><\/h2>\n\n\n\n

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\u2019re 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\u2019re more likely to approve your loan.<\/p>\n\n\n\n

5. Include your professional resume<\/strong><\/h2>\n\n\n\n

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.<\/p>\n\n\n\n

6. Prepare the necessary documents<\/strong><\/h2>\n\n\n\n

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:<\/p>\n\n\n\n