Business Term Loans
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In Business Term Loans, the entire risk is absorbed by the lending bank as opposed to the Business Term Loan and Working Capital loan which the Singapore government shares 90% of the risk. Usually given on top of a Micro Loan or Working Capital Loan, this allows businesess who are looking for funds above the loan cap to obtain additional capital.
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drive deeper transformation.”
1. What is the Business Term Loan?
The Business Term loan is a financing program offered directly by Banks in Singapore. Seperate from Government initiatives such as the Working Capital Loan and Temporary Bridging Loan, the Business Term Loan is internal bank funds.
Business Term Loans can be used for business expansion, cashflow, payment for goods, purchase of goods from suppliers, financing daily operations or the growth of companies as well as other business expenses.
2. What is the criteria to apply?
The criteria for applying for the Business Term Loan is as follows
|Company Type||Sole Proprietors, LLPs and Private Limited companies are eligible to apply|
|Shareholding||At Least 30% owned by a Singaporean or Permanent Resident|
|Incorporation Length||Subject To Bank’s Assessment||To find out more about this criteria, please make an enquiry here.|
All businesses with at least 30% Singaporean or Permanent Resident shareholding qualify except Listed companies. Incorporation Length is subject to bank, and some banks require a longer or shorter incorporation length.
3. How and Who do I apply to?
To apply the following documentation is required, but not limited to
|6 months company bank statements||Yes|
|2 Years Profit Loss and Balance Sheets||Yes|
|2 Years Director’s Notice of Assessment (Income Tax)||Yes|
|Signed Application Form||Yes|
The loan amount is calculated based on the incoming cash flow, outgoing transactions and average daily balance among other things. Other requirement such as Credit Bureau and Personal Income tax plays a part in the assessment process.
Lastly, a write-up or justification for the purpose of the loan in required. Should you be applying through Equity, we will do this for you.
4. The participating lenders in
the Business Term Loan Program are as follows
|CIMB Bank Berhad|
|DBS Bank Ltd|
|Maybank Singapore Ltd|
|Oversea-Chinese Banking Corporation Ltd (OCBC Bank)|
|RHB Bank Berhad|
|Standard Chartered Bank|
|United Overseas Bank Ltd|
These lenders above are all participating in the SME Business Term Loan by the Singapore Government. However, each lender has their own further qualifying criteria. For instance, a business might qualify with Lender A, but be rejected by Lender B and vice versa. The qualifying criteria for each lender changes constantly so do check back from time to time if you are not eligible the first time.
5. How much Can I Loan?
SME’s can now loan up to S$1,000,000 Business Term Loans. However since the funds are offered directly with the banks.
Should businesses require additional funds, they can apply for the SME Working Capital Loan, which allows businesses to borrow S$1,000,000, up from the previous amount of S$600,000. This is useful for businesses seeking additional cashflow or for business expansion.
There is no collateral required for the loan. However, if collateral is also pledged, the loan amount can be potentially more.
The actual loan amount will be calculated based on the last 6 months of your business’s bank statements along with other factors, dependent on bank.
6. The long can I loan for?
The maximum tenure that you can loan for is 5 years or 60 months. With the Business Term Loan , Singapore businesses are able loan up to 60 months with principle and interest paid in equal monthly installments.
An illustration of the repayments are in the table below
|Loan Period||Total Amount||Interest Rate (%)||Monthly Repayments*|
|No Early Repayment Penalty|
*monthly repayments might vary and are subject to change
Businesses might be subject to an early repayment penalty, hence companies applying for the Business Term Loan should decide at the start the tenure they would like to have, or if they would like a loan with an early repayment penalty, apply for the Working Capital Loan or Temporary Bridging Loan.
7. What are the interest rates like?
Interest Rates depend on banks, but are in the range of 8% effective to 9% effective . The interest rate is determined by the lender and might vary from lender to lender. Equity Capital Solutions can assist you to identify the lender with the lowest rate and provide a smooth and seamless application. Please click here to have a specialist assist you.
8. What happens if I decide to pay early?
Congrats! You’ve decided to pay off your loan early. To find out the exact loan amount payable, you’ll have to first do the following.
- First call the business care number of the lender your loan Is with
- Next, let them know and verify your business details
- Once that is done, they will calculate the outstanding loan amount and the total amount due up till date.
- You have to make payment at the branch of either the full amount or multiples of S$1,000
- If you make full payment, the loan is concluded and no other payments are required
- If you make partial repayments, the loan and interest is recalculated based on the amount outstanding
9. What if I need more than the amount approved?
The amount for the Business Term Loan depends on the revenue of the business, average bank balance and if there is collateral pledged. Businesses are also able to apply to more than one bank if they require more funds.
For example, Lender A approves a Business Term Loan at $200,000 and you require more. You can apply at another lender for the additional loan amount you need.
If you require more than S$1,000,000 you can apply for the SME Working Capital Loan, (“WCL”), Temporary Bridging Loan (“TBL” ) which goes up to S$5,000,000 or the Business Term Loan offered by banks
10. What happens if I don’t qualify?
Equity Capital Solutions can assist to identify why the your application was not eligible for the WCL and assist you again for a successful application.
For greater credit amounts up to S$5,000,000, you might want to explore applying for the Temporary Bridging Loan.
In summary, the Business Term Loan is a useful product for businesses seeking to increase their cash flow or for business expansion. This is an important financing product for businesses looking to grow with cheaper capital costs and should be considered for every business.
How It Works
- Make a Free Enquiry.
- An Equity financing specialist will reach out to you for some simple details.
- We work together with you for the documentation.
- You relax and we do the heavy lifting for you.
- We contact you when its approved for signing down the loan.