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A Complete Guide to Startup Business Loan Singapore

Startup Loan

Startup business loans are made for small and medium-sized enterprises (SMEs) who are in the early stages of their business, and provide them with various financing options for their needs.

Given that businesses will most likely have periods of high income and also periods of recession, startup business loans will help in making sure the business stays sustainable during different kinds of situations.

It depends on the strategy of business owners on how they will utilize this kind of loan that they will apply for. For example, it can sustain a capital increase or operational costs.

What is a startup business loan?

Start up business loans are made for new or young businesses, which usually falls in the SME category.

Given that they are still new or young, the income of startup businesses will usually experience having trouble financing their needs in either expansion or recession decisions.

However, business loans in Singapore that cater start up business financing are scarce. In the last few years, Singapore has recognized this financing issue and has made efforts in providing financing options for startup businesses that can provide them with the capital that they need.

The amount of these different kinds of loans can go as high as $100,000 or even $5 million, which the business owners can use as a capital loan or a working capital. These loans have their own corresponding interest rate as well.

How do startup business loans work?

Depending on the type of loan and the financing company that will provide the loan, they will firstly require different documents that will prove your eligibility to apply for a loan, such as credit history, income details, personal information, etc.

Some companies won’t even require your credit history in certain types of loans.

These lending companies will also provide you with loan details, such as the various loan types that are appropriate to your situation, the corresponding interest rates (as the interest rate will differ with each type of loan financing), and payment options.

You should choose a loan that you’re confident with, especially with the payment system. As long as you passed the eligibility criteria, these loans are processed relatively quickly as long as you start the application process early as well.

For the different types of startup business loan that is usually offered, take a look at the next section for options of start up business loan Singapore context.

List of the start up business loan options in Singapore

These are the different types of Singapore business loans for start up and SME category, along with their interest rates (interest rates can go from 2.5% to 18% annual), maximum loan amount, and length of the repayment period (length goes around a year, 4 years, and a maximum of 5 years).

Startup Loan Product Interest Rate Maximum Loan Amount Repayment Period
SME Micro Loan 3.5% to 4.5% annual $100,000 1-5 years
Crowdfunding: Unsecured Loan 12% to 18% annual $200,000 3-24 months
First Business Loan 3.2% to 4.5% annual $300,000 1-5 years
Startup Loan for Medical Doctors and Dentists 2.5% to 4.5% annual $500,000 1-5 years
SME Venture Loan 2.5% to 11% annual $5,000,000 3-5 years
Crowdfunding: Invoice Factoring 1% to 1.5% monthly Up to 80% of invoice value 30-120 days
Personal Loan for Business 6% to 9% annual 12x of monthly income 1-5 years

How startup business loan can help entrepreneurs

1. Improve cash flow

Startup business loans financing can help you meet the financial obligations of your enterprise, such as capital, employee salaries, rent, insurance, and other operational costs.

2. Enhance financial budgeting

A micro loan can also help not only in immediate emergency expenses in the company, but also in expected expenses in the near future, and can greatly help in setting budget plans involving capital for a given timeframe.

3. Seize expansion opportunities

A startup business micro loan can also help you in taking your SME business to the next level, by providing you with the working capital for expanding various aspects of your business, such as your workforce or additional business branches. This aspect of a business can take longer without loans, so business owners are opting to register for loans to expedite the process.

Requirements and eligibility for startup business loan

To be eligible for an SME startup business loan, you must meet these three criteria:

  • Your company must be registered in Singapore
  • Your company based in Singapore must be operational for at least one year
  • Your business has a minimum turnover of $60,000 per year

For the requirements, here are the necessary documents for application:

  • All Directors and Partners NRIC
  • Recent information report (Business Profile) from the Accounting & Corporate Regulatory Authority (ACRA)
  • Recent income tax assessment notice (both personal & from the corporation)
  • Recent financial statement
  • Recent invoices or business contracts
  • Recent 6-month bank statements
  • List of assets owned by the business, directors & partners (if any)

How to Improve Your Chances of Getting a Business Loan Approved?

1. Make sure to submit all correct documents and requirements

By referring to the list of requirements for the context of a Singapore business loan above, you now have an idea of what documents are needed to start your loan application. Make sure that the requirements are updated to reflect changes in your business in the recent financial years. In the event that the latest audited profit and loss statement was created more than 6 months ago, you should try submitting a management account of the profit and loss statement for the last 6 months to show the growth of your business and also its profitability.

2. Clear your personal debts

Your balance to income (BTI) ratio will come into consideration when you start your micro loan application, so consider clearing your existing loans to improve your credit rating. Remember that lending companies will only give you a loan amount that mirrors your capability to pay.

3. Get your Business Loan to Licensed Moneylenders

It is very important to only transact with licensed moneylenders in Singapore because of the fact that they follow guidelines set by the government of Singapore to protect its clients. Aside from being registered with the Singapore Ministry of Law, licensed moneylenders will display their license number on their website. They also take pride in clearly-defined terms and regulations, as well as the experience of having courteous client financing transactions.

Raffles Credit is a good example of a trustworthy licensed moneylender. Being one of the most reputable licensed moneylenders in Singapore, they offer a wide selection of loan packages for clients, including startup business loans. They have been in operation since 2011, and they have a collection of positive reviews from their clients because of their client-centered approach.

How to find the best startup business loan in Singapore

With all of these things being said, it is also good to consider the convenience of the registration process.

This, along with a client-centered commitment, safe and secured transactions, and excellent reviews on online platforms such as Google Reviews and Loan Advisor, are the makings of being one of the best licensed moneylenders that offer a startup business loan in Singapore.

365 Credit Solutions, one of the most popular licensed moneylender companies in Singapore, has all of these qualities that make it one of the best in the industry.

Their approval process is only an hour. The information that you provide with them is secured and your client rights reserved by confidentiality, so you don’t have to worry about having your information displayed in public.

Lastly, they possess positive reviews on Google Reviews and Loan Advisor, which is a testament to their “client first” approach in their business transactions. If you’re in need of a loan for your SME business, then you should go and check out their loan offers right now.

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