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Getting SME Business Loan in Singapore is not Easy: What Will Qualify You.

Racheal Muriithi

In the prevailing economic conditions, access to financial credit by small SMEs has become almost impossible. The recent global recession left many countries in a stuttering economic condition. Singapore has not been an exception, and the recent economic flop in China only made things worse. With these economic outcomes, banks get more stringent while offering loans.

Getting SME Business Loan in Singapore is not Easy: What Will Qualify You.

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This phenomenon poses significant disadvantages to small and medium business owners. These businesses are going under as they can’t meet their financial obligations. This situation affects the country at large as the SMEs contribute largely to the country’s economic growth.

Nevertheless, small businesses still need to access credit. Getting a financial institution to stand in the gap can be the only savior. Though many financial institutions purport to be supportive to the SMEs, they still put stringent loan qualification requirements. These requirements render many businesses not eligible for financing.


Statistics by Linkflow capital, a business loan consultancy firm, indicated that 81% of Singapore SMEs don’t qualify for financing. Here are the parameters the finance lenders use to determine creditworthiness.

  • Age of the company: They require a business to have an operational history of two years.
  • Minimum account balance: There should be a minimum average daily balance of S$10,000 maintained in the account.
  • Minimum annual revenue: The lenders require a business to have minimum annual revenue of S$ 300,000.

Many SMEs are not able to fulfill these requirements thus incapable of accessing finances. However, the Singapore government has moved swiftly to salvage the situation by introducing the SME Working Capital Loan Program among others.


What is SME Working Capital Loan Program?

This is an unsecured working capital loan of up to S$ 300,000. The government launched it in mid-2016 and will run up to may 2019. It was primarily introduced to help businesses access larger working capital and improve cash flow needs. This facility provides for a maximum repayment period of five years. These are the qualifications for the facility.

  • Registered and operating in Singapore
  • Local shareholding of at least 30%
  • A total annual group sales of S$100m or a group employment size of up to 200 employees. Thus, annual revenue is computed on a group basis.

In case of a default, the Enterprise Singapore shares the risk with the participating financial institutions.


P2P Crowdfunding

The commonly known P2P crowdfunding is Kapitalboost. This facility is beneficial to SMEs as it caters for small and early-stage companies. These companies can borrow up to S$150,000 to pay within a short period. It is purely an asset purchasing platform. Borrowers enjoy a better approval rate and less paperwork when compared to other traditional lending banks.

The Kapitalboost charges no fee for early repayment. They charge an industry standard administration fee of 3-4%. The borrower receives cash in 30 days, and for repayment, the institution provides a fixed monthly repayment schedule. It is an opportunity useful to SMEs with purchase orders. The facility allows a maximum purchase order financing of S$ 150,000. Eligibility criteria include:

  • Annual revenue of S$100,000
  • Operating history of at least one year
  • Positive free cash flow in the previous year.
  • For purchase order financing, the applicant must have purchase orders from customers.

The application process only requires the company information and the bank statements for the last 12 months. You may wonder why Kapitalboost charges no interest. Towards the end of the financing period, the SME repays the facility and also some profit earned from the sale of the asset. The profit is paid to the financier according to the agreed-upon profit sharing ratio.


The SME Talent Program

Are you an SME who is resourceful and looking to attract young local talents from Singapore? Then, this is your finance opportunity. The SME talent program offers not more than 70% funding. This support is to assist in your monthly internship costs when you provide internship to students. They can be students from universities, polytechnics and the institute of technical education (ITE).

The programme requires you to have mentoring opportunities with supervisors. Also, you should have well-structured learning objectives which are well-aligned with the guidelines of SkillsFuture Enhanced Internship.


The Benefit

You can involve interns at an early stage and incorporate them in your hiring strategies. You can then absorb them in job opportunities after they graduate. Taking in these interns can help save a lot of hiring and recruitment cost. The internship program also helps to save a lot of cost on salaries. Employees salaries eat up about 60% of gross revenue on average.  Thus this funding can stand for a significant proportion of your operating costs and help your business thrive.


Funding Eligibility

  • At least 30% local shareholding
  • Group annual turnover of up to S$100 million, Or group workforce of up to 200 workers
  • Provide internship opportunities with clear job descriptions and offer a clear career progression path
  • Have a sound human resource procedure
  • Willingness to participate in Enterprise Singapore’s Human Resource Maturity Diagnostics (HRMD)

This program supports SMEs fully in funding application and also in the internship part of it. Get more information here.


Capability Development Grant

Capability development grant (CDG) helps SMEs to scale up business capabilities to achieve sustainable growth. It can give aid in business projects such as product development, workforce development, enhancing business processes and standards adoption. The grant settles up to 70% of qualifying project costs.

You qualify for this grant if you meet the following criteria:

  • You are registered and operating in Singapore
  • You have a minimum of 30% shareholding
  • Group annual revenue of S$100 million or less, or group workforce of up to 200 employees

Applications are subject to approval by Enterprise Singapore. CDG will be replaced by Enterprise Development Grant (EDG) together with Global Company Partnership (GCP). The launch of EDG will happen on 25th October 2018.


SME Go Digital Programme

The SME Go Digital Programme (SGDP) aims to help SMEs build strong technology capabilities as well as embrace digital technology. In a nutshell, the SGDP seeks to scale digital usability, improve productivity and increase sales for SMEs.


Eligibility Criteria

To qualify for SGDP, you must fulfill the following:

  • Your business is registered and incorporated in Singapore
  • Possess a minimum of 30% local shareholding
  • Have a group annual revenue of not more than S$100 million
  • Have a group workforce of not more than 200 workers

Whatever emergency you have as an SME, your help is within reach. Whether you need money to expand your store or increase your stock, you are sorted out. All you need is to peruse over, the above financing opportunities and determine which suits you best.


See other interesting articles here:

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How to Change the Image of Investment Bank: Goldeman Sachs’ Loan Business

Promising Chinese Whiskey Market as Suntory Seizes Opportunity, Sets up Shop in Tmall (Alibaba)




(By Racheal Muriithi)

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