Best Business Loan Singapore

All the available resources, from government assistance schemes to small and medium enterprise loans, you can bank on to bridge the gap during choppy times.

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COVID-19, with the consequent measures on the Circuit Breaker, cause sales streams to dry up, threatening to shut down many SMEs. With low earnings since the beginning of the year, it can be difficult for you to continue paying suppliers, employees, and rentals or strive to keep your business afloat.

A business loan can help. To supply businesses with the finances they need to continue to operate, the Government made available two special aid packages. Besides that, there is also a wide range of payment loans and other loan instruments available from local banks and financial institutions (FIs).

Please read about our recommendations on Singapore’s best SME loans to help your company achieve them.

BEST SME Business Loans 2021

SME Working Capital Loan

Temporary Bridging Loan

OCBC Business First Loan


DBS Digital Business Loan

StanChart Business Installment Loan

UOB BizMoney Loan

Maybank Business Term Loan

Government-assistance schemes: SME Working Capital and Temporary Bridging Loan

The SME Working Capital and Temporary Bridging Loan, as announced by the Singapore Government under the Solidarity Budget, are intended to support COVID-19’s effects.

SMEs seeking relief should look towards these two loans first, given:

a) The company Singapore risk share of 90% (which reduces credit card risks and increases approval opportunities);

b) The possibility to defer primary repayment for the first 12 months of the loan (which helps businesses manage cashflow)

Furthermore, you can benefit from interest rates limited to only 5% per annum when you apply under a Tempo Bridging Loan.

Best SME loans up to S$200,000: UOB SME Loan, OCBC Business First Loan and DBS Digital Business Loan

If your business requires only a small loan, say under S$200,000, you might want to check out these three SME loans.

OCBC’s Business First Loan

OCBC’s Business First Loan offers up to S$100,000 with a maximum tenure of 4 years. There is no paperwork or collateral required for this loan, but at least one Guarantor (Singaporean or PR 21 years old and above with annual income of minimum S$30,000) must be provided.


A similar loan is the UOB SME Loan, which also allows you to borrow up to S$100,000. However, the maximum repayment period is shorter, at 3 years. To qualify, your business must be at least a year old, 30% locally owned and with more than 50% equity held by individuals. Your business should also not have more than 200 employees and annual turnover should be under S$100 million.

DBS Digital Bank Loan

Meanwhile, the DBS Digital Bank Loan allows you to borrow up to S$200,000, with a repayment period as long as 5 years. As the loan is offered under the Resilience Budget, you can therefore opt to pay only your interest charges during the first 12 months of your loan. To qualify, your business should be registered and physically operating in Singapore, and be at least 30% locally owned. No collateral is required to take up this loan.

Best SME loans up to S$500,000: Standard Chartered Business Instalment Loan, UOB BizMoney Loan and MayBank Business Term Loan

UOB and Maybank can have the loans you need Standard Charters for a business loan in the range of S$300,000 to the content S$500,000.

Standard Chartered Business Instalment Loan

The default chartered business facility loan allows you to borrow between S$70,000 and S$300,000 free of collateral and a 1 to 3-year loan reimbursement period. This loan’s efficient interest rate will vary, but it is currently limited by up to 11%. To qualify, you have to be registered in Singapore and have a minimum sales of S$750.000 per annum for at least three years. Singaporeans or PRs shall own at least 50% of the company.

UOB BizMoney Loan

The UOB BizMoney Loan provides somewhat more capital for enterprises with a loan cap of up to S$350,000. The period of payment is also longer, up to 5 years. At present, the strong interest on this credit is 10,88% annually, with an installation fee of 2%. (a.k.a processing fee). Please note that an annual fee of S$500 is also available. The loan is open for the exclusive ownership of Singapore-registered and operating companies, partnerships, and private companies for at least three years.

Maybank Business Term Loan

The Maybank Business Term Loan may be appropriate if you are seeking a half-million business loan. This loan pays up to S$ 500,000 and has up to 5 years’ loan repayment. To qualify, your company should have an annual minimum sales revenue of at least S$300,000 locally, established at least for three years.

Alternative financing options for SMEs

If you don’t qualify for the SME loans discussed above, there are other ways to secure the finances you need to expand your business or keep it going. You could consider:

  • Invoice factoring
  • Credit lines
  • Personal installment loans

The fact-factoring system is a tool for corporate finance that handles outstanding cash invoices.

How it works: You sell your unpaid invoices to a third-party company, which pays a part of the value of your invoices. The business that buys your invoices then takes obligation for collecting the invoice payments.

With invoice factoring, you can take up to 90% of the value of your invoices in cash. Many financial institutions in Singapore offer this option (is it also seldom known as receivables finance). While this might be an excellent way to get cash fast, know that you are sacrificing a part of revenue upfront. Also, you may still be held liable for any overdue or late invoices. 

Another choice for businesses seeking capital is a credit line.

How it works: This provides your business a line of credit to draw upon — up to a stipulated cap. The benefit of a credit line lies in its flexibility; you can use the funds in your credit line account according to your requirements, and you only pay interest on the amount you have used. Credit lines also offer debt restructuring options to assist you in managing your borrowings.

Last but not least, don’t overlook personal installment loans. They offer a quick & convenient way to get the funds you need to tide your company over a dry spell or to pay your suppliers so you can stay in business. Typically, you can borrow up to 6 – 8 times your monthly salary, and you can also pick a repayment period that suits your schedule.

It depends on several factors how difficult it is to get a company loan. The overall economic situation at the time you apply depends on the grand scheme of things. The Singapore credit approval rate, for example, is 13.5%, below 10% for the month before September. As a result of the COVID-19 pandemic in small firms, the approval rate was low compared to the high of 27.3% last year. Your business’s credit rating, the financials, the length of your time in business, and other banking requirements are other factors that impact your capacity to receive a loan.

You probably found that corporate-startup loans and startup financing are difficult as a new business. Lenders are reluctant to provide startups with a track record of revenue to offer term loans, business lines, equipment financing, or invoice factoring.

However, FR Capital loans are challenging to obtain. Typically, they go to companies with guarantees — a physical asset like real estate or equipment that the lender can sell if you default. The skills are strict, and even if you qualify, it can take several months to apply for a small-scale loan.

It’s a fantastic adventure to begin your own business, but it certainly has hidden dangers. To start with, you must be able to survive the first few months before you make a profit, and these early stages are exactly what kill the newest enterprises.

According to Opportunity Business Loans, you can avoid taking out a business loan. Bankruptcy by eliminating non-essentially significant expenses and reducing labor costs. But what if you started right and had enough capital to allow your business to flourish?

 What if you come up with a brilliant idea that outweighs your debt?

 It doesn’t mean that you won’t recover your investment in the following three months and even make a profit because you have fifteen thousand dollars to start.

All this is because you understand your idea and carry out proper market research. Is it good enough for your idea? Have you got competitors? Can you make it work?

It has not been unknown and experienced entrepreneurs for years to make a loan to begin something with a pretty good chance of returning your investment. If you are skilled enough, you use another bank to start and produce your business in just a few months or one year.

However, remember that your initial investment costs can be grossly underestimated, so make sure the numbers run carefully if you’ve got to twice.

 Because being undercapitalized is the last thing you want to experience.

 But you can still get to the under-capitalization point. It doesn’t matter, according to INC, whether you run your business as best you can or grow very fast. There’s very little you can do once you’re out of cash.

You can also take a loan to minimize the chance that you will end up with no money. It’s possible to go two or three months without getting anything out of it; it acts as a kind of buffer zone.

 And profit should soon follow.

 The truth is that the lender wants you to succeed. That’s how their money is returned and how lucrative partnerships are formed.

Removing a loan to finance your business is an excellent way to give yourself some breathing space. It provides a buffer zone between the beginning and turning point of profit, as we mentioned above.

 So, should you take out a loan to start a business?

 If you think about the idea and know that it can be beneficial, then yes. Does it in every way? But do not forget the hard work that comes with running a company, the immense pressure, and late hours. The money is just 25%, and you can’t take a loan big enough to build the firm you want.

Investing personal funds in a business can help you meet your startup funding needs, but it can also expose you to unnecessary risk if done incorrectly. You must ensure that the money on your business books is properly accounted for so that you can accurately track the amount your company owes you or how much ownership you have.

Make Sure You Have Separate Bank Accounts

Separating business and personal accounts is one of the most important things a small business owner can do. A legal entity for your business, such as a limited liability company (LLC), protects you from liability and covers your business decisions. Combining your personal and business finances can rob you of that protection and cost you a lot of money in the long run.

If you don’t already have one, you should set up a separate business checking account right away. You can use your phone to make payments, deposit checks, and schedule transfers with the best accessible business checking accounts. FR Capital can do all of that and more, including sending digital invoices and connecting to your Stripe account. You can open an online account with no minimum deposit in just a few minutes.

Fund Your Business Bank Account

Money must flow from your personal account to the business account for a transaction to be recorded. To avoid going through the accounting process multiple times unnecessarily, make sure you fund the total amount the business requires (or that you want to invest).

It’s a lot easier to keep track of your personal finances when you have a separate business bank account.

For example, a withdrawal from your personal account and a deposit in your business account for the same amount. This makes appropriately recording transactions on your books much more accessible.

Make a note of whether your money is a loan or equity.

You’ll either book your own money as equity or a loan when you put your own money into your business. This is the procedure we will cover in this article because most companies book it as a contribution (meaning equity in the company). This implies that the company owes you nothing. Instead, you’re investing in the company’s future success in exchange for equity in the company.

How the transaction is recorded determines the accounting procedure and how the company returns your money. To maintain the legal protections discussed in the first step, you must take the necessary steps to correctly record every transaction between the business and your personal accounts.

Debit the Cash Account

The first accounting step (and the fourth overall) is to make a journal entry that debits the amount of money you put into your business checking account correctly. This procedure begins with a cash debit to show a rise in your current asset account.

You’ll need to debit cash first (we’ll show the credit entry in the next step) if you’re putting S$10,000 into your business from your personal assets:

Credit the Capital Account

After that, you’ll need to credit your capital account. While the name of this account varies depending on the entity type, it represents the owner’s stake in the company. You’ll credit the owner’s equity account to offset the debit entry you made to cash in step four. These entries are opposites since they are designed to keep your balance sheet balanced.

Here are the 5 reasons why small business owners should not use a business bank account for personal use.

  1. It Makes It Tougher to Manage Cash Flow

Your Company’s cash flow situation becomes confusing and harder to predict when blending your business and personal funds.

For example, your business might not have enough funds when a vital bill comes due.

Why? Because you chose that precise time to pay personal expenses from your business account.

Sometimes you look at your business account balance, see there’s money there, and think you can spend it, but this could lead to many cash flow crises.

  1. It Erodes Personal Liability Protection

If you own a corporation or limited liability company (LLC), you might be held personally liable for business debts due to commingling your personal and business funds.

Limiting personal liability of commercial debts is one of the main advantages of forming an LLC or a company. But you can take protection out of business if you operate the Company as though it does not exist separately, such as the payment of a personal bank account—Ry’s obligation. If you have other owners or investors, then you will eventually be paid for personal expenses from a company account.

The corporate veil has been known to be “pierced” by courts. This means they have the power to hold you liable for your Company’s debts.

One-owner The corporate veil is most likely to be pierced by LLCs and corporations. Because you are the sole owner, you believe that fund separation is unimportant.

You think, ‘Who is going to object if I use my business account for personal use?’ A company creditor, that’s who?

If your company closes down, leaving business debt behind, an unpaid creditor could pursue you with legal action.

  1. It Overstates or Understates Tax Deductions

It’s more difficult to identify corporate spending when paying personal bills with a corporate bank account. As a result, legitimate deductions can be overlooked. Or, if you are audited, you can erroneously categorize individual costs as companies leading to penalties and a large IRS tax bill.

If you don’t keep your financial records up to date, this problem is complicated. You often wait for expenses to be categorized once a year at tax time.

Memory fades around when March or April rolls around. You may need to search a receipts drawer only to find out that there is no documentation. Or maybe you forgot if something was a company or a personal one. This is a fertile mistake base.

  1. It Makes Accounting Unnecessarily Complex

It is harder to keep accurate accounts when you merge.

To separate personal expenses from your business expenses, you need to do additional work. It’s not just downloadable to Quickbooks, Xero, or Zoho Books. The history of the bank transaction, and you know all expenses are related to business.

Instead, someone needs to categorize expenses carefully and carefully. It’s an unnecessary handbook to reduce the productivity of your business. Furthermore, memory fades, and it is harder to reclassify if you do not get there immediately.

  1. Leads to Objections by Other Stakeholders

Shareholders, investors, and business partners don’t like your personal piggy bank to treat the business.

This was discovered as problematic by the founder of WeWork. In the summer of 2019, the high-flying Company, formerly worth $47 billion, submitted an IPO. The disclosures revealed the self-handling of the founder, including personal credits he obtained from the firm at lower price levels.

In other words, the founder transferred the funds of the Company for personal purposes.

As CEO, it was forced by the Company’s biggest investor. Finally, the company he founded had to resign!

WeWork is an example of a high profile. However, remember, stakeholders could sue for misappropriation of the funds, fraud, or fiduciary duty, even in a small enterprise with no plan for the initial public tender. If you have other owners or investors, then you will eventually be paid for personal expenses from a company account.

It can be an administrative upheaval to deal with business finances. The line between your business revenues and your own may be blurred when you work for yourself. Therefore, careful handling of these matters is critical. It is liberating to control your finances, but it is your responsibility to respect all legal obligations in this area.

If legal requirements are not adhered to, you and your business could have negative consequences. It is common for people to withdraw for personal use from a business bank account. It depends on whether you are a single trader or a majority shareholder, or a director of a registered company. Put, in specific contexts, it is possible, but only.

Sole trader

 The laws on traders alone and the use of commercial income differ from the laws of companies. As an individual trader, you can use money as ‘personal drawings from the business bank account. However, as a single trader business structure, amounts collected from the business are part of and must be declared as part of your taxable income.

While there is no legal basis for a separate business bank account, we recommend that you trace your company’s finances. You can legally use your business with an existing bank account in your personal name even if you have registered a business name other than your own.


 Because they exist as a separate legal entity, companies must have a different bank account. Depending on the kind of account it opens, the company will also be liable for bank charges. The signatories must be more than 18 years of age for the bank account. Therefore, you cannot withdraw money for personal use even if you are a director or majority shareholder of the company.

The company pays the salary of a director or the fee of a director, but no ‘personal draws.’ Corporate funds should ultimately be used for the proper purposes of the company. More information on these requirements is available on the Australian Government Business website.

Tax on business bank accounts for personal use.

 Removing money from the accounts of businesses will affect your taxes. Keeping your transactions records will make tax time much more accessible. There can be specific positive and negative implications. As stated, the withdrawal of money from your personal bank account may form part of your personal income. In any case, the better your business finances are structured, the more prepared you are at the end of the financial year. When you’re starting a business, read about the business banking guidelines of the Australian Tax Office.

Every business structure can be different, although this is quite simple. Therefore, the laws applicable to your own unique situation should be familiar to you. Right from the beginning, it is essential to establish your business finances correctly. If you do not know how to structure this, a business lawyer can be worth consulting.

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About FR Capital

FR Capital is a Singapore consultancy firm that assists SMEs to secure business loans from banks and financial institutions. We specialize in SME finance and through our expertise and network, we help clients secure funding with low interest rates efficiently and hassle free.