Like individuals, businesses also need to borrow money from time to time for running their daily commercial operations and for a variety of other purposes. These loans help the businesses in expanding their operations and adding to their profits. Due to the rising cost of operations and due to the volatile nature of the international financial markets, running a business these days is not an easy task. The management often finds it difficult to pay for the expenses of the organizations from the profits alone and they have to look for other ways to acquire the required finances. Hence, they have to apply for loans from financial institution to get the required cash within a short period of time.
What are Business Loans?
Banks and financial institutions around the world offer products, services and solutions to both individuals and businesses. Corporate banking services help banks in earning billions of dollars’ worth of revenue every year so they offer a variety of loan products to business corporations and help them in getting the required finances for continuing their operations. Apart from that, many lenders also offer specialized loans that provide the required finances for starting a new business venture or for expanding the operations of a small business. The loans come at low to moderate interest rates and the borrowers get a decent amount of flexibility in paying back the borrowed amount. Business loans are also known as industrial and commercial loans.
Types of business loans available in Singapore
A wide variety of business financing is available in Singapore and some of them are given below.
- Secured business financing – Many of the business or commercial loans offered by the banks and financial institutions are secured i.e. the applicants have to provide collateral security to borrow the amount that they need. The collateral can be in the form of bonds, property, financial assets and so on. Such financing ensures that the banks can lend money at the minimum risks possible as they can be assured that the money that they lend can be easily recovered, even if the borrowers fail to make payments.
- Unsecured or non-collateral financing – There are many banks in the island that offer the required finances in the form of loans to businesses without asking them to offer any collateral security for the amount they borrow. Such financing is very beneficial for the businesses that borrow money from the banks as they will not have to face the risk of losing their valuable assets in case they fail to pay off the borrowed amount. However, they will need to have a very strong credit history and higher credit worthiness in order to be eligible for such business loans.
- Guarantor-based financing – In case the commercial establishments that are unable to offer collateral security and also do not qualify for non-collateral loans, they can provide third party guarantor security and then avail a loan from the bank. The guarantor will have to jointly sign the agreement with the Principals/ Partners/ Sole Proprietors and in case these individual(s) are unable to make payments for the loan the guarantor will be responsible for paying off the loan amount. This facility allows many small and medium scale businesses to avail the money that they need for continuing their business operations.
- Commercial Property Financing – In order to start a new business venture or to expand an existing one, businesses might need to borrow money and get the required finances for purchasing a commercial property of their choice. There are few banks in Singapore that offer loans for the purchase of commercial property at attractive rate of interest and also offer the borrowers with a range of other beneficial features such as flexible tenors and so on. In most cases, such a loan can only be utilized to purchase commercial properties in Singapore.
- Government Assisted Loans - The Government of Singapore offers various schemes under which businesses registered in Singapore can avail the required finances to expand their operations or to simply continue functioning as a legal business entity. These schemes are popularly known as the Enterprise Finance Scheme, Insurance Scheme and the Micro Loan Scheme. Many of the banks in Singapore offer a range of business and commercial loan products under these three schemes. The loan amount offered is higher and the eligibility criteria are very relaxed. Moreover, the repayment tenors are very flexible and the interest rates are comparatively low.
Apart from the above, commercial establishments can also avail loans for the purchase of equipment, expanding their operations in other countries and so on. In fact, the banks and financial institutions in the country are more than willing to lend money for a variety of commercial purposes. In most cases, the eligibility criteria is that the business has to be registered in Singapore and a decent percentage of the company’s share should be owned by the permanent residents or the citizens of Singapore. Many of the banks also offer business loans under the government of Singapore assisted Micro Loan Program. These loans come with flexible criteria and lower interest rates, along with other beneficial features.
Banks offering business loans in Singapore
Some of the top banks in Singapore such as DBS Bank, OCBC Bank and Standard Chartered Bank Singapore offer business loans through their SME Banking and Business Banking services.
- DBS Business Loan
The business loan product from DBS bank is known as DBS Business offers loan amount of up to SGD 500,000 and helps businesses in improving their daily operations. The borrowers also benefit from attractive interest rates and a simple application procedure.
Features and Benefits of DBS Business Term Loan
- It provides businesses with easy access to cash and allows them to enhance their cash flow.
- It is an unsecured loan and so the businesses do not have to provide any collateral security for availing the loan amount.
- It offers companies with the finances that they require for expanding their business operations.
- It comes with fixed monthly payments through which the borrowers can pay off the loan amount.
- It comes with attractive rate of interest and flexible tenors of up to 5 years.
How to apply for DBS Business Term Loan?
In order to apply for this loan, you will need to submit a duly filled application form and the form can be downloaded from the official website of DBS Bank. You will need to send the form via fax or mail, or you can also drop it at any of the branches of POSB or DBS Bank.
Documents Required for DBS Business Loan
OCBC Business Loan
- Copy of NRIC (front as well as back) of the applicants and the guarantors.
- Notice of Assessment (Income Tax) of the key partners/ directors/ sole proprietors for the last 2 years.
- Latest 6 months bank statements (in case the operating account is with a bank other than DBS)
- Last 2 years financial statement. The statements should not be more than 18 months and they should have been audited when applicable.
The bank offers a myriad of business loan products that are designed to meet the different needs of businesses in Singapore. These products are listed below.
- Collateral-free loans – The three types of collateral-free business loans offered by OCBC Bank are as follows:
Commercial property loan – This is a unique loan product from OCBC bank that allows the applicants to purchase a commercial property of their choice. The loan amount offered can be as high as 80 percent of the market value of the property at the time of applying for the loan. The loan comes with flexible repayment period of up to 25 years.
Equipment & Machinery Financing - OCBC understands that businesses cannot run properly if they do not have the right equipment or machinery. Hence, it offers this loan product through which business establishments in the island can purchase the equipment and/ or machinery that they need to continue their operations or to grow their customer base. It is only available to business entities registered in Singapore.
Internationalisation Finance Scheme – This is a loan product that is helping Singapore-based businesses to expand their operations overseas. It is an asset based financing scheme through which the businesses can avail up to 90 percent of the purchase or valuation price of the property. Other credit assistances offered by the bank include structured loan and banker’s guarantee.
Business Purchase Financing – Purchasing essential things for businesses will no longer be difficult, thanks to the business purchase financing offered by OCBC Bank. The loan is offered to business entities have to be registered in Singapore to avail this loan facility.
- Business First Loan – With the business first loan from OCBC, businesses will enjoy easy approval and can avail higher loan amounts. It is offered under the Micro Loan Program assisted by the government of Singapore.
- Business Term Loan – The business term loan offers businesses with loan amounts as high as SGD 500,000. It also comes with flexible repayment period of up to 5 years.
- Business Overdraft – With the overdraft facility, businesses can avail up to SGD 200,000 and they will need to pay interest only on the amount that they use.
OCBC Business Loan Eligibility
UOB Business Loan
- The business entity has to be registered in Singapore
- Minimum 30 percent ownership of the company should lie with a Citizen or a Permanent Resident of Singapore
- The business should have been operational in the last 2 years.
- Other eligibility criteria given by the bank may also apply.
One of the top 3 local banks in the country, UOB offers a wide range of banking and financial products, including loans, which are designed to cater to the needs of all kinds of businesses in the country.
Government Assistance Loans –
UOB offers the following government assisted business loans:
- Local Enterprise Finance Scheme (LEFS) Micro Loan
- Local Enterprise Finance Scheme (LEFS) Equipment Loan
- Loan Insurance Scheme (LIS & LIS+)
- Short Term Credit - UOB offers a variety of short term credit to commercial establishments to help them in dealing with their immediate financial needs. These loans are unsecured and they do not require the applicants to offer collateral security.
The short term credit offered by UOB Bank to businesses in Singapore include the following:
Business Property & Equity Loan - Like other banks, UOB also offers loans to businesses to help them in purchasing commercial properties of their choice. The loan is available to purchase new properties and applicants can also opt for refinancing of their existing loan. Apart from that, businesses can further opt for getting a loan against their property and the loan amount can be as high as 90 percent of the value of their property.
Vehicle & Machinery Financing - UOB provides financial assistance to businesses for purchasing vehicles and machinery needed in continuing their commercial operations. The loan amount can be as high as 100 percent of the commercial value i.e. price of the vehicle.
BizMoney Account - This is another flexible business loan from the bank that offers customers with loan amounts as high as SGD 350,000. It is an unsecured loan and no collateral security is required.
- UOB BizMoney
- UOB Overdraft
- UOB Platinum Business Card
Fees and Charges for UOB Business Loan
Standard Chartered Bank Business Loan
Rate of Interest
12.99 percent per annum
2 percent of the loan amount approved
SGD 500 per annum
The business loan offered by Standard Chartered Bank is known as the business instalment loan. It is an unsecured loan that offer up to SGD 300,000 as a loan amount. It comes with flexible tenors of 1 year to 5 years. The borrowers also get a current account (complimentary) as there is no minimum initial deposit for this account.
Standard Chartered Bank Business Loan Eligibility
- The business has to be registered in Singapore
- Minimum 50 percent ownership of the company should lie with a Citizen or a Permanent Resident of Singapore
- The business should have been operational for minimum period of 3 years.
- The business should have a minimum turnover of SGD 500,000
Documents Required for Standard Chartered Bank Business Loan
- Copies of the identity cards or passports of Principals/ Partners/ Sole Proprietors
- Last 6 months bank statement of the operating account of the company
- Application form for the business instalment loan
Explore Other Loan Products at BankBazaar.sg:
Business Loans – FAQs:
- What is the maximum amount that I can borrow under business loans?
The maximum amount offered through a business loan will depend on the bank with which you are applying for the loan. Different banks have different criteria and some of the banks can even offer you with a loan amount as high as SGD 500,000.
- What is the tenor offered with business loans in Singapore?
The tenor offered with these loans will usually range from 1 year to 5 years.
- Do I need to provide collateral security for all kinds of business loans offered in the island?
No, you will need to provide collateral security only for the secured business/ commercial loans offered in Singapore.
- Do the banks have any minimum turnover requirement for their business loans?
Yes, some of the banks have a minimum turnover requirement. For example, the minimum turnover of your company should be SGD 500,000 if you want to apply for a business investment loan with Standard Chartered Bank Singapore.
- How long does it take for the banks to process the loan application?
It takes a longer time for the banks to process business loan application and they can usually take 2 - 3 business weeks to process the loan application once they receive it.
- If a business is inactive, can the business owners apply for a commercial loan in Singapore?
No, the business owners can only apply for a business loan if their business is currently active and has been active for a minimum period of 2 years or more.
- Can foreign businesses operating in Singapore apply for business loans in from banks in the country?
No, only businesses that are registered in Singapore can apply for business loans from the banks and financial institutions in the country.
- Do moneylenders offer business loans in Singapore?
Yes, apart from the banks many of the moneylenders and other non-banking financial institution offer business loans in the country.
- Can I apply for a loan to purchase a commercial vehicle in Singapore?
Yes, you can apply for a loan to purchase a commercial vehicle in Singapore and these loans are offered by banks such as UOB, OCBC Bank etc.
- How can I calculate the EMI for my business loan?
You can take help of an EMI calculator to calculate the EMI for your business loan. Such EMI calculators are available on the websites of many of the banks and other financial institutions.
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