How Long Is A Small Business Loan Term In Singapore?
If you are a small business owner in Singapore looking for financing options, you may want to consider a small business loan. Small business loans are available in various forms and amounts depending on your needs.
Improving cashflow is a critical need for many businesses, and small business loans can provide much-needed capital to help your small business get off the ground.
Hence, understanding how long is a small business loan term is essential to make sure the loan is suitable for your small business.
What Are SME Business Loans?
Business loans involve borrowing money from a financial institution such as a bank to purchase assets or cover operating costs. The amount loaned and repayment period will depend on the lender’s appraisal of your business situation.
Small business loans, also known as SME loans, are designed to provide capital for a small business that needs financial support for its operations.
How long is a small business loan term in Singapore is an essential factor that makes these types of SME loans suitable for various purposes.
These loans are usually provided by financial institutions or licensed money lenders. They can come in the form of term loans, lines of credit, invoice financing, merchant cash advances, and more.
How Long Is A Small Business Loan Term In Singapore?
Unlike most personal loans, SME business loans Singapore do not come with years of minimum requirement for repayment terms. This means you can avail these loans for short terms to solve small financial needs.
Generally, small business loans in Singapore are available for terms ranging from six months to five years.
However, how long is a small business loan term depends on the purpose of the loan and the amount borrowed.
This type of short term loans Singapore offers the benefit of better cashflow visibility as it allows small business owners to plan their cash outflows better.
For example, with SME loans Singapore for invoice financing, you get the funds you need to finance the working capital of your small business without having to wait for customers to pay their invoices.
What Are The Business Loan Options In Singapore?
Small business loans Singapore come in a range of options to suit small businesses’ needs.
Different loan products have their pros and cons – depending on the purpose of the loan, how long is a small business loan term, and your financial situation.
Here are some of the options for common short term loan Singapore.
Line Of Credit
This is one of the best open-ended SME loans that allows even new small business owners to borrow money up to their approved amount and pay the outstanding balance off over time.
The interest rate for lines of credit is usually lower than other small business loans so that small businesses can access funds as needed.
The lines of credit SME loans Singapore lenders provide can be applied for online and approved in two days.
Short Term Loan Singapore
Term loans are one of the most common small business loans Singapore that are easier to get for small business owners.
The repayment period for these small business loans Singapore is fixed mostly around three to 18 months. However, they often come with a higher interest rate than other SME loans.
If you are looking for a short term loan Singapore with no repayment terms, equity financing could be an option. Equity financing involves small business owners selling a portion or share of their company in exchange for capital.
Fixed Asset Loans
Fixed asset loans are a type of SME financing Singapore offers. They are designed to help small businesses purchase expensive items such as machinery and equipment.
A fixed asset loan is usually offered with a fixed repayment tenure and must be used for the purpose stated in the contract.
Working Capital Loan
A working capital loan is one of the most borrower-friendly small business loans Singapore available.
These are short-term loans that help small businesses with their day-to-day cashflow needs. They offer a flexible repayment period that can be tailored to your small business’s specific needs.
Invoice financing enables small business owners to get a limited-period loan in exchange for unpaid invoices. This is an excellent way to access urgent capital without having to wait for customers to pay their invoices.
You just need to submit your invoice, and the small business loan will be sanctioned in no time.
Commercial Property Loan
Commercial property loans are designed to help small businesses purchase or renovate commercial properties.
Such SME financing Singapore comes with longer repayment terms as compared to other small business loans.
Trade loans are short-term financing solutions designed to help small businesses with their international trade needs.
These SME business loans Singapore offer small businesses the capital they need to purchase raw materials, cover shipping and export costs, or simply manage any cashflow problems that may arise during the process.
Equipment And Machinery Loans
Equipment and machinery loans are also short-term options available to small businesses, intended to help them purchase expensive equipment and machinery.
These small business loans Singapore offer longer repayment terms than other small business loan types, ranging from three to five years.
Personal Loan Vs Business Loan
When deciding between a personal loan or small business loans Singapore, it is important to consider the purpose of the loan.
Personal loans can be used for small purchases, short-term financing, and consolidation of debt. But small business loans Singapore are tailored for your small business’s specific needs such as working capital, purchasing inventory or machinery, and more.
Here are a few common differences between personal and business loans.
- Loan period: How long is a small business loan term is one important factor to look at when choosing a loan for your business needs. The loan tenure is up to seven years for personal loans and up to five years for business loans, depending on the lender.
- Loan amount: When applying for personal loans from a licensed money lender, you can get up to six times your monthly salary if you earn more than $20,000 yearly. The loan limit for business loans is four times your monthly salary.
- Business age: To apply for SME loans Singapore, your business must have been around for at least six months. Some lenders require your business to be at least two years old.
- Interest rates: Personal loan interest rates are usually higher than small business loan interest rates, as small business owners have more options for repayment and collateral for lenders.
- Processing time: Personal loans are usually processed much faster than small business loans Singapore as the paperwork can be overwhelming for small business owners.
- Loan purpose: Personal loan funds can be used for almost anything, while small business loans Singapore must be used for a specific purpose such as purchasing inventory, equipment, and more.
Hence, in order to get loans for business purposes, it is always best to choose business loans over personal loans.
Loans that are specifically designed for small businesses offer more advantages and options than personal loans – such as lower interest rates, greater flexibility of repayment, and longer loan terms.
Before applying for small business loans Singapore, it is important to know how long the loan term is and what type of small business loan options are available in Singapore.
How And Where To Apply
When it comes to applying for SME loans Singapore, there are a few things you must consider:
- Your small business’s credit score and financial history
- How much money you need to borrow, repayment terms, interest rate, and repayment period
- The size of your company is also a major deciding factor while applying for small business loans Singapore
- Whether the small business loan is unsecured or secured
Once you have considered all these factors, you can begin your search for small business loans Singapore lenders.
Comparing short term loans Singapore helps you get the best loan with the most competitive interest rate.
But where can you apply for SME business loans Singapore?
Various banks offer small business loans Singapore with competitive interest rates. Banks provide different loan packages to small businesses depending on their needs and provide loan-specific repayment terms.
Most banks take longer to approve SME business loans as they have to assess your small business’s credit score and financial history.
It is important to note that your business needs to be operating for at least two years to be eligible for SME loans.
Also, at least 30% of the company’s shares must be owned by Singapore citizens or permanent residents of Singapore.
Some of the banks in Singapore that offer SME business loans are:
- DBS Bank: Offers business loans up to $500,000 for your business needs with flexible repayment terms of one to five years.
- OCBC Bank: Has a variety of types of loans for small businesses that can be chosen depending on the business needs you have.
- Standard Chartered Bank: Offers SME financing Singapore for cashflow or business expansion needs of up to $300,000.
There are also a few other SME loans Singapore lenders that offer small business loans depending on your small business’s needs.
Licensed Money Lenders
Licensed money lenders provide SME business loans at competitive interest rates and flexible repayment terms.
Most small SME business loans offered by money lenders are short-term loans involving small sums of money.
Legal money lenders provide working capital with quick approval times, so you can get the funds you need to grow your small business quickly.
While some money lenders may have stringent requirements for small business owners to qualify for small business loans Singapore, you can still find money lenders that are willing to lend small businesses the funds they need.
Since licensed money lenders are approved and regulated by the Ministry of Law, they offer assurance to small business owners that their loan applications will be processed securely and quickly.
Choose The Right Small Business Loan Lender
To sum it up, small business owners have many options when it comes to small SME business loans.
Depending on their needs, small businesses can choose from banks or licensed money lenders for their small business loan needs.
Whichever you choose banks or licensed money lenders, do shop around and compare the small business loan offers available to get the best rate and most suitable terms for your small business. Don’t forget to take into account how long is a small business loan term.
If you are in need of SME loans Singapore, Horison Credit can be your go-to choice with affordable interest rates and flexible repayment options.