Guide to Best Small Business / SME Loans in Singapore (2021)

You're a struggling small business or SME (small-to-medium enterprise) owner, and you're looking to improve cash flow with a loan. What are the options? Let's cover the small business loan options in Singapore, and what you can do if you do not qualify for an SME loan.

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What are the Business Loan Options in Singapore?

Business loans are an umbrella term to describe any kind of loan offered to a company for business purposes. There are actually many types of business loans: Some are just offered for whatever business needs you might have (such as for managing cash flow, or for furthering your growth), while others are offered specifically for certain business needs (such as machinery/equipment or property loans) or even types of businesses (start-ups). The most common types are covered below.

Business Loan

The "standard" business loan is an unsecured loan (meaning you do not offer any of your assets as collateral). You then choose a repayment term of up to 5 years to pay it off. All major banks such as DBS, OCBC and UOB offer this to local businesses, but there may be certain requirements such as how long your business has been around, and how much revenue it makes.

SME Working Capital Loan

This is a special type of business loan that's offered to local SMEs (max. 200 employees). The Singapore government works with banks to offer financing of up to $1 million per borrower, to be repaid within 1 to 5 years. The SME Working Capital Loan is available to Singapore-registered SMEs that are at least 30% owned by Singaporeans/PRs.

Temporary Bridging Loan

Another government-backed business financing scheme to help tide all businesses (not just SMEs) over the Covid-19 outbreak. This is open to Singapore-registered companies that are at least 30% owned by locals. The loan amount can be up to $5 million, and repayment period of up to 5 years.

Startup Business Loan

Sometimes called a "first business loan", the startup business loan is a mini version of the regular business loan, offering a smaller cap of, say, up to $100,000. It is considerably easier to get a startup business loan, as you only need to be in operation for a few months and do not need a strong financial history to borrow.

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Why Might Your Business Loan Be Unsuccessful?

As you can see, there are many types of business loans available to SMEs in Singapore, and the government has even stepped in to ensure that funding is available to more small businesses. However, your business loan application may still be unsuccessful - and you will typically only find out after applying for the loan and waiting 2 weeks for it to get processed. Here are some possible "problem areas" when you are trying to secure a business loan:

Track Record

Getting a business loan if you have a fledgling business can be really tricky. Providers typically require your business be around for at least 6 months to qualify. Even if you are established, they may require proof of your annual revenue to lend to you. So if you are only just starting out, it may be difficult to get a business loan.

Business Ownership

Government-assisted financing is open only to businesses registered in (and present in) Singapore, who are at least 30% owned by Singaporeans/PRs. If you do not have enough Singaporean/PR shareholders, you may find it harder to secure a business loan.

Credit Score

Business loan providers can also choose to deny your loan if you have a poor credit score. A low credit score causes banks to doubt your ability to repay your loan. And yes! Your personal credit score does impact the results even if it's for a business loan.

Personal Loans for Small Businesses in Singapore (2021)

If you are unsuccessful or do not qualify for a small business loan, you may consider getting a personal loan instead. A personal loan has somewhat more relaxed requirements; however, the loan amount is also much, much smaller - for example, 4 times of your current salary. Therefore, personal loans are best suited to salaried workers who are looking to start their own side businesses and don't need much to kick it off with.

Business Loans vs Personal Loans in Singapore

Business LoanPersonal Loan
Loan AmountUp to S$1 millionUp to 4X monthly salary
Loan PeriodUp to 5 yearsUp to 7 years
Documents RequiredACRA records, business financial reports, etc.Personal salary records
Business Age RequirementMin. 6 months, some require min. 2 yearsNone
Processing Time2 weeks or moreWithin a few days

HSBC Personal Loan

Up to $300 Cashback!
Up to $300 Cashback!

HSBC Personal Loan

Interest Rate*
3.4%
Total Amount Payable
S$11,020
Processing Fee
S$0
Per Month
S$306

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Valid until 30 Sep 2021

If you are a foreigner in Singapore who's looking to kick-start your business idea with some funding, the HSBC Personal Loan is a good place to start. Unlike other banks, which may impose very high minimum income requirements on foreign lenders, HSBC's income requirement is just S$40,000 per annum. That's within reach for many PMETs here. You will also need an Employment Pass with minimum 1 year validity to apply.

If you are self-employed or commission-based, HSBC also lends to you. You will need to show proof of at least S$40,000 a year in income.

With an HSBC Personal Loan, you can borrow up to 4 times your monthly income, capped at S$100,000. (Special allowance for those earning S$120,000 a year and up: 8 times your monthly income, capped at S$200,000.)

Overall, HSBC Personal Loan is a good choice for small business owners as it boasts one of the lowest interest rates in Singapore, and the longest loan tenure of up to 7 years.

HSBC's personal loan interest rates are guaranteed when you apply through MoneySmart, so you need not worry if you have a less-than-stellar credit score from past mistakes. You can get in-principle approval for your loan within 1 minute.

Standard Chartered CashOne

Interest Rate
3.48%
Total Amount Payable
S$11,044
Processing Fee
S$0
Per Month
S$307

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Valid until 30 Sep 2021

Standard Chartered's personal loan product, CashOne, has a lower-than-usual income requirement for locals. You just need to be earning S$20,000 annually to qualify for this loan, so it's great for low income earners who want to start their own business. For foreigners, the income requirement is S$60,000.

If you qualify, you can borrow up to 4 times your monthly income, capped at S$250,000. It's hassle-free too: You can get your loan instantly approved and disbursed to any bank account (no need to set up a StanChart bank account).

Standard Chartered personal loan interest rates are also guaranteed for customers who apply through MoneySmart. Be assured that your credit score will not result in a sky-high interest rate.

Citibank Quick Cash

Interest Rate*
3.45%
Total Amount Payable
S$11,035
Processing Fee
S$0
Per Month
S$307

If you are new to Citibank, you can enjoy preferential interest rates on Citibank personal loans, exclusively on MoneySmart.

To get the preferential interest rate, you will need to borrow at least S$20,000. Now, we would not recommend borrowing more than you absolutely need, but this amount is reasonable for those who are planning to kick off their small businesses.

To qualify for a Citibank personal loan, you need to be earning at least S$30,000 p.a. (Singaporeans/PRs) or S$42,000 (foreigners).

The maximum you can borrow is 4 times your monthly salary, and you can choose a loan period of up to 5 years.

When applying for Citibank personal loan, you will need to set up a Citi deposit account, if you don't have one already. Your funds will go in there. You can apply for both products in the same form, and the cash will be in within 2 to 5 working days.

Frequently Asked Questions

What are the documents required to apply for a business loan?

If you are applying for a regular business loan with a bank, you will need to furnish documents to prove your business track record. For example, your financial statements/reports, bank statements, GST declaration and so on. Banks may want to see these records from an extended period (e.g. the last 2 years) as well. If applying for a government-backed business loan such as the SME Working Capital Loan, you may need to show proof of your company's ownership, such as ACRA records. A startup business loan, however, requires fewer business documentation (sometimes no documents at all). And with a personal loan, you need only furnish your personal income documents, NRIC/FIN and work pass and that's it.

How long is the business loan application processing time?

Business loans typically take about 2 weeks or so to process, since there is a large amount of paperwork for the provider to go through. This is understandable as business loans tend to be quite large, and lenders want to be confident that they are lending to the right people. During troubled economic times, banks may also get a high volume of loan applications, resulting in even longer processing times. With a personal loan, however, you can get instant approval and the funds disbursed in your bank account within days.

Can I get loan to start a business?

If you have not started your business yet, you will not be able to get a business loan. Even for startup business loans, you will typically need to be a registered/operational business for at least 6 months to qualify. You can choose to register your business anyway and start operations on a small scale for 6 months before attempting to apply for a small business loan. If you are severely cash-strapped, you may consider applying for a personal loan to start your business. However, be sure that your business plan is functional enough that you will be able to afford the monthly repayments. Otherwise, the repayments will have to come out of your own pocket!