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What are the Business Loan Options in Singapore?

If you own a business in Singapore and need financing to run it, there are many loan options available. As of 2023, multiple government agencies are providing SME loans. These organizations provide small business loans with competitive interest rates tailored for businesses in different stages: the start-up phase or the growth stage.

Whether it's an established firm seeking working capital injections or a new enterprise exploring expansion opportunities, these specialized lenders will have something that fits your needs! Through their sophisticated search tools, they help firms reduce the hassles associated with paperwork while making sure all parties involved can easily reach fair terms offered by financial institutions in Singapore.


There are several types of business loan options available in Singapore. Here are some of the most common ones:

  1. SME Working Capital Loans (WCL): WCL is a government-assisted financing scheme in Singapore designed to help Small and Medium Enterprises (SMEs) access financing for their day-to-day operations and working capital needs. Risk sharing between participating financial institutions and Enterprise Singapore (ESG) is between 50-70%. The scheme was introduced by ESG and the Monetary Authority of Singapore (MAS) in 2016, and it is available until 31 December 2023. Under the scheme, eligible SMEs can apply for unsecured working capital loans of up to S$500,000 for a maximum loan tenure of 5 years. The interest rates and repayment terms are typically in the range of 4-8% simple interest per annum between 1 to 5 years.

  2. Business Term Loans (BTL): Business term loans, also known as business installment loans, are a type of financing where the borrower receives a lump sum of money and repays it over a fixed period, typically ranging from one to five years. The loan amount, interest rate, and repayment period are predetermined, and the borrower must repay the loan in fixed installments, usually on a monthly basis. Financial institutions typically offer BTL and do not co-share any risk with ESG. Thus, the profile of clients is typically better compared to WCL, and the interest and loan repayment are very similar to WCL; between 4-8% simple interest per annum repayable over 1 to 5 years.

  3. Mortgage Financing: Mortgage financing refers to the financing provided to individuals or businesses to purchase, refinance, or cashing out using a property as collateral. Mortgage financing is typically available for both residential and commercial properties, and the maximum loan-to-value (LTV) ratio for residential properties is 75%, while for commercial properties, it can be up to 90%. Business owners can also use their unencumbered (fully paid) property to cash out to finance their business/individual requirements using the individual/company as the borrower. The loan tenure can range from 5 to 30 years, and the interest rate ranges from 3-12% p.a. In addition to the loan amount, borrowers may also need to pay for other costs associated with the mortgage financing, such as legal fees, stamp duty, and valuation fees. Legal fees and valuation fees can range from S$1,800 to S$4,500 and $200 to $800, depending on the value and size of the property. Besides typical banks, there are financial institutions that offer flexible structures and lending criteria to finance using their property. E.g., directors with bankruptcy status, poor personal credit rating, etc.

  4. Invoice Financing / Factoring: Invoice financing and factoring is a type of financing where businesses can obtain immediate cash flow by selling their unpaid invoices to a lender or a factoring company at a discount. The process of invoice financing involves the business selling their outstanding invoices to the lender or factoring company, who will pay them a percentage of the invoice value, typically ranging from 70% to 90%. The lender will then collect the payment from the customer on the due date of the invoice and deduct their fees before remitting the balance to the business. Invoice financing can be beneficial for businesses that have long payment terms and need immediate cash flow to pay their bills or invest in their operations. It is also suitable for businesses that are growing quickly and need to manage their cash flow effectively. The interest rates and fees for invoice financing/factoring range from 0.5% per month depending on the borrower/debtor's profile, the creditworthiness of the business, the currency of the invoice payment as well as the tenor of the financing period. Overall, invoice financing can be an effective way for businesses to obtain immediate cash flow by selling their outstanding invoices. Besides typical banks, there are also financial institutions and factoring houses which offer such facilities.

  5. Revolving Credit Facilities: Revolving credit facilities are a type of financing that allows businesses to access a pre-approved line of credit on an ongoing basis. This means that businesses can borrow and repay funds as needed, up to the approved credit limit. Revolving credit facilities can be beneficial for businesses that need flexibility in managing their cash flow and have short-term financing needs. For example, a business may use a revolving credit facility to purchase inventory, pay for operating expenses, or take advantage of a business opportunity that requires immediate funding. Revolving credit facilities may be secured or unsecured, depending on the lender's policies and the creditworthiness of the business. Secured revolving credit facilities require the business to provide collateral, such as accounts receivable or inventory, fixed deposits, or even property, to secure the credit line. Unsecured revolving credit facilities do not require collateral but may have higher interest rates and stricter eligibility criteria.

  6. Hire Purchase / Equipment Financing: Hire purchase/equipment financing is a type of financing where businesses can obtain funds to purchase or lease equipment for their operations. The process of equipment financing involves the business obtaining funds from a lender to purchase the equipment needed for its operations. The equipment itself is often used as collateral for the loan. The loan is then repaid over a period of time, typically through fixed monthly payments. Equipment financing can be beneficial for businesses that need to acquire equipment but do not have the cash on hand to purchase it outright. It can also be beneficial for businesses that need to upgrade their equipment to remain competitive or improve efficiency.

Government Support Schemes for Business Loans

Having a business loan in Singapore can help you get your company off the ground and stabilize business operations.

Major banks such as DBS, OCBC, and UOB offer to finance local businesses. However, there are restrictions in place. These restrictions include the time frame in which the business has been operational and the amount of yearly revenue made.


To aid small and medium enterprises (SMEs), government schemes also provide loans up to S$300,000 per individual for a duration ranging from 1-5 years, depending upon eligibility criteria that include having 30% ownership shares held by Singaporeans/Permanent Residents (PRs).

Businesses faced with uncertainty due to the Covid-19 outbreak can opt for a Temporary Bridging Loan, which doesn't limit itself to SMEs, offering repayment periods of up to 5 years while setting a cap at S$1 million. Startup companies who need smaller amounts may prefer startup business loans, usually capping their value at S$100k and requiring a minimum 6-month time period since establishment rather than a strong financial record. However, it's comparatively more feasible than regular ones.


The Enterprise Financing Scheme (EFS) is a financing scheme launched by the Singapore government to help SMEs (Small and Medium Enterprises) obtain financing for their business needs. The scheme is administered by Enterprise Singapore, a government agency that supports the growth of local enterprises.

The EFS is designed to provide easier access to financing for SMEs in several areas, including working capital loans, trade financing, venture debt financing, and equipment financing. The scheme aims to help SMEs obtain financing at more favorable terms and conditions, such as lower interest rates, longer repayment periods, and lower collateral requirements.


Under the EFS, businesses can apply for financing from participating financial institutions, such as banks and finance companies. The government provides risk-sharing with financial institutions to encourage them to provide financing to SMEs.

There are three types of EFS financing:

  1. EFS-SME Working Capital Loan: This financing provides working capital loans of up to S$500,000 for SMEs to support their daily operations, such as inventory management and cash flow management.

  2. EFS-Trade Loan: This financing provides trade financing for SMEs to support their import and export activities, such as financing for pre-shipment and post-shipment activities.

  3. EFS-Loan Insurance Scheme: This financing provides insurance coverage for SME loans of up to SGD 50 million to help SMEs obtain financing at more favorable terms and conditions.

Alternatives to Bank and Non-Bank Financing Solutions for SMEs in Singapore

Most banks and non-bank financial institutions offer competitive interest rates on their business loans. However, it's important to remember that the rate you get could change depending on a few factors, such as how much money you borrow, your credit score, and years in operation.

Also, remember that some of these lenders may require collateral (such as property) or a guarantee from yourself/your business partner if they deem it necessary before disbursing the loan amount. On top of traditional bank/non-bank financing options for SMEs in Singapore, there are also government funding schemes available to tap into, most notably the PACT Scheme, which provides co-financing with participating banking partners. Companies can receive up to S$200k subsidized by Enterprise Singapore over periods between 1–5 years!

To qualify for this scheme, businesses must be incorporated locally, at least 30% owned by locals, with annual revenue not exceeding $100 million per annum, amongst other criteria. Finally, certain social welfare organizations provide grants and subsidies tailored towards individuals facing difficult circumstances, so do check them out, too, should this apply!

Singapore offers a range of business loan options to meet the needs of small and medium-sized businesses. From government-backed loans to private financing solutions, you can find an option that fits your unique requirements. ThinkSME has exciting borrowing packages which include low-interest rates with flexible repayment plans tailored to the small business owner's needs.

No matter what stage or size your business is in, there are lending options available that will suit it perfectly, making starting up and expanding more feasible than ever before! Start exploring today by visiting ThinkSME's website, where our experienced advisors are ready to answer any queries you may have about taking out a loan for your company.

Ensure that you understand all of the conditions attached to the offer before it is due. This way, you can reap the full benefits of having access to capital while being aware of what they are. Having this knowledge provides entrepreneurs in Singapore with peace of mind when operating their own business ventures.


There are several financing options available for small and medium-sized enterprises (SMEs) in Singapore beyond traditional bank and non-bank financing solutions. Some of these alternatives include:

  1. Peer-to-peer lending/Crowdfunding: Peer-to-peer lending, also known as P2P lending, is a form of alternative financing that connects individual investors with borrowers through an online platform. In this type of lending, borrowers apply for loans on the platform, and investors choose which loans they want to fund. The platform acts as an intermediary, facilitating the loan and collecting payments from the borrower. Peer-to-peer lending can be an attractive option for small and medium-sized enterprises (SMEs) that may not qualify for traditional bank loans or who are looking for alternative financing options. P2P lending platforms may have less stringent requirements for credit scores and collateral than traditional banks and may offer more flexible terms and lower interest rates. One of the key benefits of P2P lending is the ability for SMEs to access funding quickly. Borrowers can typically receive funds within a few days of approval, compared to the longer processing times of traditional bank loans. P2P lending can also offer SMEs more transparency and control over the loan process, as they can interact directly with potential lenders and negotiate loan terms. However, P2P lending also carries risks. Investors may face the risk of default if a borrower cannot repay the loan, and SMEs may face higher interest rates and fees compared to traditional bank loans.

  2. Private lending: Private lending is a form of alternative financing where individuals or companies lend money directly to borrowers, bypassing traditional financial institutions like banks. Private lenders can be individuals, groups of investors, or companies specializing in providing short-term loans or bridge financing to businesses. Private lending can be an attractive option for small and medium-sized enterprises (SMEs) that may not qualify for traditional bank loans due to their credit history, lack of collateral, or other factors. Private lenders may be willing to lend money at higher interest rates than banks and may require less paperwork and documentation.

Overall, SMEs in Singapore have a range of financing options available beyond traditional bank and non-bank solutions. It's important for SMEs to explore their options and choose a financing solution that best fits their needs and goals. This way, you can reap the full benefits of having access to capital while being aware of what they are. Having this knowledge provides entrepreneurs in Singapore wit


h peace of mind when operating their own business ventures. Start exploring today by visiting ThinkSME's website, where our experienced consultants formed by ex-bankers are ready to answer any queries you may have before obtaining financing for your company.


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