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Cash Loan Application: What You Should Guide To Business Loans in Singapore: 3 Types and Their Advantages

Cash Loan Application: What You Should Guide To Business Loans in Singapore: 3 Types and Their Advantages 08/11/2021

Cash Loan Application: What You Should Guide To Business Loans in Singapore: 3 Types and Their Advantages

Singapore is an attractive business location for foreign entrepreneurs. The country has a simple tax system that imposes no tax on capital gains or dividends received from a business, making it an ideal location to incorporate and start a new business.

Foreigners can also fully own Singapore corporations, meaning you don’t need to look for a local shareholder or partner. This allows you to open a company with whatever capital structure you want and distribute the ownership according to your investment plans and goals.

If you’re planning to open a business in Singapore, you’ll likely require funding at some point during your startup phase. As such, it’s important to know the different business loans in Singapore and how they work.  Read on to find out which one to apply for, depending on your company needs.

Below are three of the common business loans in Singapore that are available to foreign entrepreneurs.

1. SME Working Capital Loan

This government-assisted loan makes it easier for small and medium enterprises (SMEs) to obtain financial support. You can borrow up to S$300,000, which you can use to finance your business’s day-to-day operations.

The maximum repayment period is five years, with interest rates varying per financier, depending on your company’s risk level and the financier’s loan scheme. The eligibility requirements also vary, so make sure to contact the bank ahead.

You can find a list of participating financial institutions and their contact details on the Enterprise Singapore website.

2. Unsecured Business Term Loan

Unsecured business term loans are the most popular loans among SMEs because of their flexibility. You can use the money to finance any business need, whether it’s to fund your daily operations or acquire new equipment.

Another benefit of this type of business loan is that it doesn’t require you to pledge any form of collateral. This makes the loan approval process and disbursement quicker, ideal for business owners who need financing fast.

Unsecured business term loans typically fund up to S$500,000, which you can repay within one to five years.

You can apply for an unsecured business term loan through banks. They’ll evaluate your company’s past financial performance and current bank statement records. Banks also often look into the guarantor’s personal credit records.

However, this business loan tends to have higher interest rates than other loan schemes because they’re unsecured. Interest rates range from seven to 12 per cent per annum.

3. Equipment Financing

Equipment financing can help fund the purchase of fixed assets like equipment and machinery, be it for the office or production plants. This type of financing scheme is often structured as a lease or a hire purchase.

Leasing is a wise option if you’re not planning to use the equipment for a long time. You just have to return the equipment to the lessor in its original condition once the lease agreement ends.

On the other hand, in a hire purchase agreement, the bank pays for the equipment on your behalf. The bank then gains legal ownership of the asset, which will be transferred to you once you finish paying it back.

Applying for a Business Loan in Singapore

loan application on laptop

It isn’t easy to secure financing in a foreign country, so it’s best to seek the advice of a loan expert or licensed lender. They’ll help you select a loan program that considers your repaying capabilities, eligibility criteria and business goals, so you can get the funding you need to grow your company.

If you need help applying for a business loan in Singapore, look no further than Capital Funds Investments. We’re a licensed lender that connects businesses and individuals with urgent cash resources, helping you quickly get the financial support you need.

Get in touch with us today to start looking at your business loan options.

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