In this portion, we will consider the factors you need to know about before taking a business loan. Also, we will discuss some of the different kinds of business loans in the market available for SMEs.
What are the factors to know before taking a business loan in Singapore?
There are many and different kinds of things that you need to consider when you are taking a business loan in Singapore. These kinds of loans are very common, which means that even SME’s can take them anytime they want. They also have an SME loan which they give to these businesses so that they can use it to grow. This is the best thing about the banks and financial institutions in Singapore that they give out loans for cheap. They have a very less interest rate which is suitable for everyone and every business. It is the prime reason why the people who are having their own SME in Singapore are very lucky and also fortunate. They are getting a loan even after having a bad credit rating which is very beneficial for them. There are banks and financial institutions which have set the rules and regulations for taking a loan. They have set eligibility criteria that are accepted all across Singapore to give the SME’s a loan. The SME can apply for a loan from a bank or any financial institution. The only thing is that they may still reject the loan based on the credit evaluation of that SME. They will check the finances of the SME and everything before giving them a loan. One of the most basic eligibility criteria which the use still now is that. The company or the SME needs to be incorporate or made in Singapore itself. The company should at least have been there in the market for two years of operation. The company should have earned a revenue of about S$300,000 in the two years of its operation. The SME should have a shareholding of about 30% of the Singaporean PRs. These were the eligibility criteria that were used in the early stages that are before the pandemic. During this pandemic, they have revised, and they have made a new set of rules and regulations that need to be met. The company or the SME in Singapore needs to have at least a 30% share in the local Singaporean business. They should have an annual sale of below S$100 million or even below that. The company should have an employment size which is less than 200 and not more than that. These are the updated criteria for the businesses to be taking a loan in the market. The Singapore government has made these changes because they want to support the SME’s also. The thing that SMEs can be the businesses that can grow a lot in the market with time and become popular.
What are the different business loans in Singapore?
A business loan is like an umbrella in the rain that protects the business in a bad financial condition. There are many types of business loans in the market, and some of them are not given anymore. The unsecured SME loan is the one that is not given anymore because nothing is kept as collateral. It is a loan in which many of the business owners have scammed the bank or financial institution. There are also different kinds of loans for the big companies and also the startups in Singapore. Given below is the list of loans that you can take while you are located in Singapore.
- Business loan
It is the standard loan in which you don’t have to keep anything as collateral. This means it is unsecured. The businesses have five years to pay it off to pay the loan off, and all banks give this kind of loan.
- SME working capital loan
It is the special type of business loan that is offered to the local SME, which has less than 200 employees. The Singapore government has been working with banks and financial institutions. They have set up around 1 million Singapore dollars to give to the SME.
- Temporary bridging loan
This is another financing scheme opened by the government to help the SMEs during the pandemic. The requirement is that around 30% of the company should be owned by the locals of Singapore. The loan amount can go up to 5 million Singapore dollars, and time is given around five years.
- Startup business loan
It can also be called a first business loan, and the government has set the amount to around 1 million Singapore dollars. They have done this to support the startups and the SME’s opening in Singapore. Therefore, startups are booming in the country due to the availability of such loans. You may be also interested on reading about consolidation loan in Singapore.
