Whether you are the proprietor of a small or medium-sized enterprise, you will need business finance during your journey. In Singapore, business loans are available for expansion of your business, to plug any working capital gaps, to finance your inventory purchases, and finally, to rent out commercial property or purchase them. This guide will introduce you to business term loan in Singapore.
In 2020, the government of Singapore brought the government-assisted business loan scheme. This was released during the COVID19 pandemic. This was a way for the government to provide support to the enterprises. These loans are offered by Enterprise Singapore and the financial institutions participating in the Enterprise. This is very appealing to small or medium-sized enterprises since, in this case, the risk share of the government is up to 90%.
Enterprise Singapore offers three different credit facilities.
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Small Or Medium Enterprise Working Capital Loan
- In this, the maximum loan quantum available is S$ 1 million.
- The government offers a risk share of up to 90%.
- This loan is only available for small and medium-sized enterprises.
- In this loan, the maximum quantum is S$10,000,000.
- In this case, also, the government offers a risk share of 90%.
Temporary Bridging Loan Program
- Under this program, the maximum loan quantum you can avail of is up to S$5 million.
- In this case, the government offers a risk share of up to 90%.
Eligibility Evaluation Criteria For The Loans Mentioned Above
To be eligible for the loans mentioned above, a financial institution must evaluate the company holistically. The past performance, current bank records, etc., will all be considered. Furthermore, the personal credit record of the guarantors will also be checked to evaluate if the company can be provided with the loan or not.
The business working capital loans and the temporary bridging loan program are unsecured. Therefore, their loan structures will also be equivalent to unsecured business loans.
Unsecured Business Term Loan
Suppose you are looking for a loan not secured by any physical collateral like equipment or property. It would be best if you opted for the unsecured business term loan. In the unsecured business term loan, the security is provided by the personal guarantee of the company’s director.
Eligibility Evaluation Criteria
The financial institution will first holistically evaluate the company depending on its current bank statement records, the past financial journey.
An unsecured business loan provides fun still $500,000. The repayment duration for such loan type is 1-5 years. The interest rate is 7 to 12% per year, and administration fees are 1 to 5% of the approved loan amount.
You must remember that the tenor, charges, loan amount, and repayment schedule may differ across different financial institutions. Therefore, you must opt for an unsecured business term loan that is affordable and can solve all your business requirements.