What You Need To Know About SME Term Loan?

Term loans, also known as term financing, are unsecured loans that enable SMEs to split repayments into monthly instalments. You will get a working capital loan of $50,000 to $2 million SGD with interest rates as low as 0.8 per cent per month with term loans.

An SME Corporate Term Loan in Singapore for day-to-day transactions, business extension, or working capital contingency. Business Term Loans in Singapore can be used for a variety of purposes, including the acquisition of fixed assets such as equipment for manufacturing processes.

When your debt is being repaid, these pieces of equipment will continue to provide a steady stream of income for your company.

With an SME Term Loan Singapore, you can boost your cash balance and day-to-day business activities. With low-interest rates, the SME Business Term Loan is planned to help Singapore businesses expand their working capital. Get financing for your company to help you secure new business markets, buy office equipment, renovate your room, and more.

With this collateral-free loan, you can borrow up to SGD 500,000 at low-interest rates for up to five years.

 What are the benefits of an SME term loan?

  • Working capital financing up to S$500,000
  • Repayment term up to 5 years
  • No collateral needed

What are the eligibility criteria for an SME term loan?

  • At least 30% local ownership
  • At least three years of business
  • A minimum annual turnover of S$300,000

What papers are required to apply for a term loan?

  • 2 years’ worth of financial statements
  • 6 months’ worth of bank statements
  • NRIC or Passport for directors and shareholders, two-year NOA, CBS research

What are the interest rates for SME term loans in Singapore?

The interest rate on a business term loan will start as low as 0.8 per cent per month.

In Singapore, there are several types of business term loan.

  1. Temporary Bridging Loan Programme (TBLP)

This programme gives businesses entrance to working capital.

As announced in the Supplementary Financial plan 2020, qualified businesses will use up to $5 million from Participating Financial Company under this programme, with interest rates beginning at 2.5 per cent per year (PFIs). On these loans, the government would bear 90% of the risk.

  1. Working capital loan

This loan used for businesses in Singapore to fund daily basis operating expenses.

The government has launched a new SM Loan scheme to help viable SMEs that may have cash flow problems or wish to continue expanding their sector.

To promote credit to SMEs, the government will share 90% of the defaulting risk of loans with contributing financial company under this programme. This will assist SMEs in paying lower interest rates.

  1. Trade Loans

 

 

The domestic and international activities of businesses are covered by the Trade Loan. It further supplements the new Loan Insurance Scheme (LIS) by insuring loans that are too large for current LIS insurers to cover.

  1. Property loans

Commercial real estate finance is not the same as residential real estate financing. The above involves a contract dependent on the home’s valuation at the time of selling. Financial institutions, on the other hand, will focus the commercial property acquisition funding in part on the potential valuation of the company. Furthermore, commercial real estate lending may have a wide range of words.

 Payment of interest on guaranteed SME term loans may be deferred. 

Small to medium-sized companies affected by the epidemic will now also able to delay interest payments on revolving term loans before the end of the year.

Deferring fees raises potential liabilities because there are costs associated with that. Be sure you consider your choices before making a decision, and then ask for a deferral if you really need one. We also recommend contacting your bank to get the most up-to-date details about your specific case.

Online Loans for SMEs in Singapore

SME’s in Singapore is getting ahead of the curve and abandoning the conventional way of doing business and applying for loans.

Obtaining Loans the Traditional Way

Loan approvals are dependent on a variety of factors, including credit ratings, year of formation, bank accounts, financial standing, business plan, and other paperwork provided by the lending authority for background checks and to protect against default. As a result, the whole procedure necessitates a great deal of preparation and careful preparation. Borrowers must schedule meetings and wait for permits for extended periods of time, and they can also be denied loans. This will have an effect on your company because you will be losing time and opportunities.

Another challenge for SMEs is that they must contact several lenders, each of which has its own website for loan requests. They are unfamiliar with the different products and lending options on the market. They are uncertain if they are qualifying for the loan, the verification process, the necessary paperwork, and so on. They will have to pay extra fees to hire loan consultants to help them with their application. Both of these issues can be solved with online loans for SMEs in Singapore.

 The Future of Digitalisation

Digital economies are becoming more prevalent, and they are linking the globe. This necessitates a growing need for newer technology that can assist in the digitalisation of the financial sector that companies depend on. By generating efficiencies, it would continue to increase the borrower experience while still lowering prices.

SMEs will be able to use a wide range of products and resources for various facets of their market activities thanks to the proliferation of online portals and fintech solutions. Digital channels make it easier to offer solutions, assess costs and returns, compare financial positions, and raise funds. For online business loan approvals, processing times have decreased dramatically, from weeks to months to just a few days or hours.

 How to apply SME loan online?

Look for platforms that break down the whole procedure into basic stages, such as submissions, verification, comparisons, and approvals. You can also use online agents and brokers to assist you with transfers.

 Eligibility criteria for online loans 

Only have the sensitive records and financial statements if you are confident in the lenders’ authentication process. Do not use websites that provide secured loans because the lenders are the ones that make the final decisions.

Benefits of Online Loans 

  • Quicker Process
  • Less Paperwork
  • Multiple Lenders
  • Variety of Loans
  • Document Management
  • Higher Approval Rate
  • Monitoring and Status Updates