Best Singapore SME Loan Options For Small Businesses

Is lack of funds stopping you from making it big in the market? But that’s manageable, here are some Singapore SME loans to finance your enterprise in the challenging times. You can use these funds to enhance your infrastructural capabilities or as a short-term financing option to tackle situations such as the time of global pandemic COVID-19. 

As you move forward into the plan to fund your business the first step is to identify your loan needs, here is how you do it: 

Identify Your Financing Needs

Singapore SME loans can be used as financial aid for several things. Here are a few good reasons to get a loan:

  • To Cover Short-Term Cash Flow Problem 
  • Funding To Acquire Equipment Or Inventory
  • Expanding Business Over Next Year
  • Short-Term Financing Options

To run a business, you always need cash to continue your daily operations. There are different types of Singapore SME loan that help a company for long-term or short-term growth.

Types of Loans 

1. Working Capital Loans

Working capital according to SME includes the following: 

  • Day-To-Day Operations
  • Including Payroll
  • Rent 
  • Utility Bills

You need to be aware that the interest rates are going to be higher for Singapore SME loans.

2. Invoice Financing

If your SME had completed work and possess a significant amount of invoices from it, you are a good fit for invoice financing. They are a good option as they help you avail loans based on invoices owned from customers. 

3. Long-Term Financing Options

As short-term financing option may be a requirement for some SME some may need Long-term option to finance their business growth and need, here is how they can make most from some available loan options:

  • Business Term Loans: Using business term loans, you can receive a lump-sum payment for longer duration and opportunity to repay the principal plus interest over a set period. 
  • Asset Purchase Agreements:  You can use Singapore SME loan via the Asset Purchase Agreements method to purchase equity for your business-like equipment, inventory, or real estate, to continue or expand their operations. You can avail loan by keeping asset as collateral, interest may vary depending on the property you put as collateral. 

How to Think About the Cost of a Loan

Before taking a loan, you need to consider the cost of each financing option. Interest rates are different based on what option you choose. Interest rates are going to be higher for an unsecured loan and lesser for secured loans, plan the borrowing amount accordingly.