Explore How Can a Business Loan Assist SMEs with their Financing Needs

Explore How Can a Business Loan Assist SMEs with their Financing Needs

Last updated on March 29th, 2024 at 10:11 pm

Small and medium-sized businesses (SMEs) in Singapore, in particular, can expand their operations while maintaining a healthy cash flow with a business loan from financial institutions like banks.

Singapore is not short of financing solutions for businesses to help achieve their organisational goals. Other than the government-assisted schemes, you have leading banks like DBS supporting SMEs with several innovative financing solutions that help deal with sales volatility, take advantage of new business opportunities, and promote and manage cash flow. Here are a few business loan options for SMEs in Singapore:

Working Capital Loans

SMEs with 200 employees and a group income of at least S$100 million are eligible for a business loan. The Singaporean government collaborates with banks to offer loans to SME borrowers up to S$500,000 with one- to five-year payback terms. 

SMEs like limited liability partnerships and ACRA-registered companies in Singapore, with 30% equity ownership by Singapore permanent residents or citizens, are eligible to qualify for the working capital loan.

Business Loans

Most SMEs look for opportunities to grow by entering new markets and expanding their operations in order to compete with other companies in the market. If they have enough cash flow, they can develop their business. DBS offers business loans, which can be easily applied for and obtained online. Nonetheless, the bank will check your business’ eligibility for a loan through a credit assessment. 

A business enterprise with regular revenue and a positive cash flow can apply for a business loan. SMEs that do not qualify for government-backed loans can get assistance from private banks. You can take out a working capital loan or a business loan up to SGD 500,000 at a reasonable interest rate and flexible repayment period of 5 years.

When applying for online business financing with DBS, you have some benefits, like: 

  • User-friendly app to help you have easy access to information and loan applications 
  • Easy loan process online
  • Save on low-interest rate

Overdraft Services

SMEs can get a revolving credit line from DBS through an overdraft facility as well. Up to the agreed credit limit, you are permitted to use funds for operational expenses or business expansion. Some key features of overdraft services from DBS are:

  • Apply for it quickly and easily using the information online
  • Access money instantly through your business account, and 
  • Withdraw and use only the required amount for which you need to pay the interest

Venture Debt Financing

Venture debt financing (VDF) enables startups to gain access to extra funding and cash. It works in concert with the venture capital you currently have. The loan amount typically ranges from 10% to 30% of the entire amount of money that you can effectively raise in the previous financing or fundraising phase.

With venture loan funding, you can:

  • Better equity returns
  • Have easy access to the DBS worldwide network 
  • Enjoy equity dilution and flexibility
  • Have funding to extend the runway
  • Deal with experienced businesspeople

Your startup can apply for venture loan financing if you have a feasible business idea and plan.

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Account Receivable Purchase

A trade that involves capital principal in relation to a company’s accounts receivable is known as an accounts receivable. Accounts receivable are assets that represent unpaid invoices that have yet to be paid by your clients or customers. 

Accounts receivable purchase has gained popularity in recent years with the use of advanced technologies that help link the details of business accounts receivable with accounts receivable platforms. An SME can easily obtain accounts receivable financing when compared to acquiring other types of business funding.

With these financial solutions, SMEs in Singapore can meet their immediate funding needs.

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