FAQ for Business Loan
Any locally incorporated company with at least 30% local shareholding can apply for a business term loan, no matter how big or how small, although some lenders will only lend to private limited companies, so do check with the respective Financial Institutions
Different lenders have their respective industry exclusion list which includes but are not limited to:
Casinos, gambling &/or gambling equipment
Lethal military weapons & equipment
Traders in precious metals (retail sales of jewelry is acceptable)
Night Clubs/ Bars
Money Lenders/ Pawn shops
Money Changers/ Exchange/ Remittance
Any other businesses which are involved in illegal activities or which could adversely affect the Bank’s reputation
*above stated as a general guideline as, unlike personal loan, business loan credit assessments are more comprehensive and detailed.
The TBLP was introduced to help the enterprises access working capital.
As announced in the Solidarity Budget on 6 Apr 2020, the Government will enhance the TBLP further with 90% risk share. The enhancement will apply to new applications initiated from 8 April 2020 until 31 March 2021. For applications that are pending approval from PFIs, enterprises are advised to speak to their PFIs on their eligibility.
As announced on 12 Oct 2020, TBLP will be extended from 1 Apr 2021 to 30 Sep 2021. Under this extension, the Government’s risk-share on the loan will be lowered to 70% (90% currently) with the maximum loan quantum lowered to S$3 million (S$5 million currently). This is to calibrate the support for businesses as the economy gradually recovers.
The tenures for business term loans can range from 1 to 5 years. The longer your tenure is, the lower your monthly instalments will be and the more interest you will incur.
All lenders charge a fixed processing fee of 1-2% and some lenders charge an annual fee. Thus, do scrutinise your offer letter closely before signing. Late fees and charges are applicable among all lenders.
Most lenders will require the standard documents listed below for processing:
Latest 6 months company’s operating account
Latest 2 years company audited/ management report
Latest 2 years notice of assessment of directors/shareholders
Photocopy of directors/shareholders NRIC (front and back)
Some may ask for additional documents such as company’s debtor aging list, corporate Notice Of Assessment, GST tax filing, etc.
Yes, SMEs can approach different financial institutions to apply for Temporary Bridging Loan. However, the total aggregate borrowing under the scheme from different Financial Institutions cannot exceed S$3,000,000.
The participating Financial Institutions for the Temporary Bridging Loan Scheme are:
CIMB Bank Berhad
DBS Bank Ltd
ETHOZ Capital Ltd
FS Capital Pte Ltd
Goldbell Financial Services Pte Ltd
Hong Kong and Shanghai Banking Corporation
Hong Leong Finance Ltd
IFS Capital Ltd
Maybank Singapore Ltd and Malayan Banking Berhad, Singapore Branch
ORIX Leasing Singapore Ltd
Oversea-Chinese Banking Corporation Ltd (OCBC Bank)
Resona Merchant Bank Asia Ltd
RHB Bank Berhad
Sing Investments & Finance Ltd
Singapura Finance Ltd
Standard Chartered Bank
United Overseas Bank Ltd
Validus Capital Pte. Ltd.
All business term loans will require the company’s directors & shareholders to be the personal guarantors. As per MAS notice 645 TDSR (Total Debt Servicing Ratio) guidelines, 20% of the monthly repayment instalment of any relevant credit facility in respect of which the borrower is a guarantor will be factored into the TDSR calculation.
Depending on the lender, it can take as fast as a week approval to as slow as a month approval. Note after approval and signing of the offer letter, it will usually take 3-5 working days for the funds to be disbursed.
Yes, of course. Besides applying by yourself, you can engage us to act as a middleman between you and potential lenders. We understand the daunting task of going through the whole rigorous process of documents submission and numerous Q&As for a company to take up a business term loan. Our job is to work on your behalf to find the best business term loan lenders who best fit your needs with the lowest rates. We have a well-developed stable of lenders we work with, making your life easier.
We are like your company loan concierge; we do all the legwork for you, negotiate terms, and make the approval magic happen. All for a nominal fee, of course.
Temporary Bridging Loan was introduced in response to the COVID-19 outbreak, to help SMEs manage their immediate cash flow needs.
Eligible SMEs can borrow up to S$3 million, with an interest rate capped at 5% per annum. SMEs that require help beyond the Temporary Bridging Loan can also tap on the Enhanced Working Capital Loan, which has been further enhanced to support loans of up to S$1 million.
Different banks have different risk appetites at different times, hence their lending policies can differ. A credit score in risk grade HH might be upright rejected by some financial institutions while others like Maybank might approve the application (Subject to Company Financial Profile and mitigation of bad Credit Bureau Score.)
Financial Institutions like Ethoz and Orix might not even need to run Directors' CBS search if entities have more than 2 Directors/ Shareholders.
The best thing you can do is to improve your credit score as much as you can and keep it at that highest possible level or approach us for advisory.
Find out more about how your personal credit bureau affects your business loan application here.
All eligible enterprises applying for the Temporary Bridging Loan are subject to assessment by Participating Financial Institutions (PFIs).
As different PFIs have different lending criteria and assessments, one rejection might not mean rejection in others but do note that any failed application with a PFI will result in a waiting period of 6-12 months before the business can re-apply with the same PFI.
To avoid this, one can approach a platform like us to assist with the company's financial assessment before they submit to PFIs.
Businesses that require further support may approach Enterprise Singapore at (65) 6898 1800 or firstname.lastname@example.org for assistance
Site visit inspection is part of the Participating Financial Institution's due diligence to make sure applicants are running a proper and legit business.
The site visit includes but not limited to:
1. Proper Company signage and tenancy agreement sighted for Company registered address
2. Sighting of Original Company operating account statements
3. Selfie with Company key person
4. Taking pictures of company premises, inventory, staff, etc.
We wish too! But sadly, borrower and guarantors are responsible to repay 100% of the loan amount.
In the event of default, Participating Financial Institutions are obligated to follow their standard commercial recovery procedure, including the effect of the personal guarantee (which means PFIs will foreclose, auction off any valuable assets of the company and guarantors), before they make a claim against Enterprise Singapore for the unrecovered amount in proportion to risk-share.
We get this enquiry a lot where business running as a sole-proprietor business with no business account.
Participating Financial Institutions required corporate bank statements for their credit assessments, thus our advice is to set up a business banking account and credit all future business proceeds to the newly set-up corporate account and apply for a business loan in 6 months time (Most PFIs required 6 months bank statement for submission except for DBS which required only 3 months bank statement for credit analysis)
Credit Call is part of the Participating Financial Institution's due diligence to make sure applicants are running a proper and legit business. Credit call is required when PFIs used solely bank statement analysis for their credit assessments. (PFIs like UOB and CIMB)
Usually, the credit call to Keyman of the business comprise of the following questions:
1. Nature of Business
2. Financing Purpose
3. How does Covid-19 affect the business
4. Proposed Loan Amount
5. Is the company profit-making?
6. What is the existing company loan commitment?
7. Annual Sales Turnover
In general, simple interest rate is less than the effective one, which is why lenders might be less inclined to advertise the latter instead of the former even though the effective interest rate is clearly the more useful rate for consumers to know.
But under the Code of Advertising for Banks that mandates that any interest-bearing loan must include the effective interest rate, in the final Offer Letter, the effective interest rates will still be reflected.
Then what is the difference between Simple Interest and Effective Interest? Are they the same?
Read here to find out more: https://www.smart-towkay.com/blog/view/263-effective-interest-rates-vs-simple-interest-rates-what-to-take-note-of-when-considering-a-loan