How to Get SME Loans in Singapore?

One of the most common misconceptions about being a business owner is that they’re swimming in lots of money. Many must understand that small and medium enterprises often need funding through SME loans in Singapore.

Do you have plans to establish your own business? Are you among the many business owners in the country interested in further understanding loan types like these? You’re definitely in the right place as you’re curious mind wishes to learn more about getting this type of loan.

In this article, you’ll uncover the definitions behind SMEs. Uncover the diverse types of SME loans, requirements and tips on getting loan approval. 

Are you excited to initiate your business or expand your company’s operations? If you are, read the excellent SME loan information below!

What are SMEs in Singapore?

SMEs are small and medium-sized enterprises in the country. The Ministry of Trade and Industry (MTI) often defines the business based on three main criteria: registration to operate in Singapore, the number of employees and the annual sales turnover. 

Apart from being registered to operate in the country, the other two main criteria critically serve as the primary guidelines in identifying and classifying businesses in the country as SMEs. 

MTI’s SME loans criteria in Singapore:

Number of Employees:

Numbers aren’t only numbers, especially in small and medium-sized enterprises in Singapore. It signifies the business’ classification based on the company’s number of employees. Today, three categories are branching from the SMEs base on the number of employees:

  • Micro-enterprise: These companies have fewer than ten (10) employees.

Viable businesses that are considered micro-enterprises in the country are:

  • Online retailers
  • Self-employed individuals
  • Freelancers
  • Hawker stalls and food kiosks
  • Home-based businesses
  • Small consulting firms
  • Small printing and publishing businesses
  • Small enterprises are businesses with at least fifty (50) employees.

Small enterprises in Singapore are:

  • Cafes
  • Restaurants
  • Small construction companies
  • Small accounting and law firms
  • Small manufacturing businesses
  • Small real estate agencies
  • Small healthcare clinics and practices
  • Medium enterprise: These businesses often have fewer than two-hundred (200) overall employees.

Medium enterprises in Singapore are:

  • Technology startups and scale-ups
  • Medium-sized travel agencies
  • Medium-sized sports and recreation centres
  • Medium-sized education and training centres
  • Logistics and transportation companies
  • Retail chains

Annual Sales Turnover:

Another factor to specifically classify a business of whether it belongs to the SME group in Singapore is its annual sales turnover. What is a turnover? It’s the overall revenue the company has generated from the sales of goods and services during the whole year. The annual sales turnover per criteria SME loan in Singapore is as follows:

  • Micro-enterprise: The annual sales turnover from the businesses classified as micro-enterprise is usually less than SGD 1 million.
  • Small enterprise: 

Small enterprises in Singapore are businesses capable of obtaining an annual sales turnover that’s below SGD 10 million.

  • Medium enterprise: 

Medium enterprises are the companies in Singapore that can earn an annual sales turnover below SGD 100 million.

In addition to the number of employees and annual sales turnover, the Ministry of Trade and Industry (MTI) considers certain factors. These factors are the business’ paid-up capital, shareholding structure in terms of determining the business’ size, and assets.

Paid-up Capital:

It refers to the funds the company’s shareholders paid in exchange for their ownership interest. It also indicates the business’ financial stability and growth potential. The MTI considers the paid-up capital as a factor when classifying a company, whether a micro-enterprise, small or medium enterprise.

For instance, a newly incorporated company with a S$50,000 paid-up capital will feasibly be under the classifications as a micro-enterprise despite having more than ten employees. It’s because the overall capital is recognised as relatively low.

On the other hand, a small retail business with a S$200,000 paid-up capital could be classified as a small enterprise as its capital is higher than a micro-enterprise. 


It refers to the resources that a company owns or controls. It can be utilised to generate income. MTI considers the overall assets when determining the business’ size.

Shareholding Structure:

All companies have a CEO, and along with the company’s founders, they will acquire a share. By Singapore’s company law, a private and limited company should have at least one shareholder. Moreover, the company cannot surpass a maximum of fifty overall shareholders. 

The power distributed to the members will gauge the percentage of ownership and voting rights held by different shareholders in the company. 

SMEs are incredibly influential to Singapore’s GDP. In truth, such businesses contributed to almost half of the GDP. As of 2022, 130,000 are registered SMEs in the country with no more than two-hundred employees.

The workforce from such businesses is estimated to reach 70% total. Thus, SMEs are crucial to Singapore’s community and economic growth. 

You’ve gained further knowledge on specific criteria the MTI uses to identify whether the company is an SME and understood their crucial role to the country. Now, it’s time to uncover which loan types are accessible in Singapore.

Types of SME Loans in Singapore

Like most businesses, it’s natural for any SME to go through financial struggles. The best way to deal with these monetary circumstances is by taking out a loan from lenders in the country. Yet, before you apply for one, discover the SME loan types for SME in Singapore:

Business Loan

It’s undoubtedly the primary standard in loans and businesses in the country. 

Business loans are recognised as unsecured loans. The loan type doesn’t need to collect collateral from its borrower to secure the loan. Since it’s an unsecured loan, SMEs should expect the interest rate to be much higher.

Most local banks in the country proffer it to local businesses, and the standard repayment terms would last up to five years to pay off the loan. In terms of loan interest rates in the country, it usually ranges from 1% up to 13% per annum.

Licensed moneylenders in Singapore proffer business loans to SMEs as well. By the Ministry of Law’s Moneylenders Act and Rules of loan capping, registered moneylenders may only demand a 4% max monthly interest rate from their borrowers.

SME Working Capital Loan

It’s the loan type you can utilise to finance the everyday operations of a company. For instance, if you’re encountering noticeable short-term business operational needs, the SME working capital loan will suit your needs. Take note; you cannot use it for long-term business refinancing or turn it into an asset.

It’s a government-backed loan specifically designed to assist SMEs in the country.

The common intention of obtaining SME working capital is to pay for the business’ rent, staff’s payroll, and debt payments. SMEs with an annual turnover of $100 or 200 group employment size may apply for this loan. Another requirement is that the local shareholdings must be at least 30%.

The interest rate (EIR) an entrepreneur can anticipate when taking the SME working capital loan would range between 7.5% to 8.5% per annum. 

Trade Financing Line

The SME loan type assists in diminishing the risks and increases the feasible profitability of a business associated with importing and exporting trade. A business owner can pay suppliers for products it orders via this loan.

It offers additional time for the business owner to convert products to sales, which allows them to improve their capacities further to order more goods. The interest rate is up to 8% per annum, with an up to 2% processing fee. 

The repayment period for the trade financing line may last 30 to 180 days per financed invoice. It’ll depend on the lender’s approval. Thus, discussing your options with the lender you’re working with would be best.

Factoring of Receivables Financing Singapore

Another SME loan type involves a supplier borrowing funds from a third-party financing institution. The classification of “factor” is a definition of selling the business’ invoices at a discounted rate. The borrower then pays a percentage of the invoice’s amount to the lender as a fee for borrowing funds.

SMEs that benefit highly from getting a factoring (invoice financing) loan are businesses that have clients with recurring invoice backgrounds regarding credit terms. SMEs who have business associations via supplying services or goods to government agencies or supermarket chains are suitable for this type of loan as well. 

The interest rate associated with factoring would range from 6.75% to 9% per annum. At the same time, the processing fee is up to 2%. The repayment term is mostly between 30 and 60 days, on top of the credit-provided period.

Equipment or Machinery SME Loans

SMEs who need new machinery or equipment may apply for this loan type. Companies in the industrial industry and other businesses can purchase additional or new equipment or machinery to upgrade their overall operations and make them more efficient. 

Equipment or machinery loans are secured loans. Thus, borrowers have to provide a machine or equipment as collateral.

The interest rates from this kind of loan may range between 2.24% to 4.5%. At the same time, the processing fee is up to 2%. The repayment term can last up to eight years.

Personal Loans

Entrepreneurs in Singapore have multiple loan choices they may apply for to help their businesses grow further. In addition to SME loans, personal loans are a viable financial product for business owners.

Personal loans offer SMEs quick access to funding their business needs. SMEs may apply for it for various purposes, whether hiring new staff, acquiring funding for employees’ salaries, making inventory purchases, or marketing campaigns.

Getting a personal loan from licensed moneylenders is possible for SMEs who may not qualify for a loan from traditional banks due to business history or credit score.

The interest rates for personal loans can vary on diverse factors, particularly the loan amount, creditworthiness, and loan tenure. Licensed moneylenders in Singapore grant personal loans with monthly interest rates ranging from 1% to 4%. The loan amount’s percentage will be the processing fee ranging from 1% to 10%.

How to Get SME Loans in Singapore

An SME who desires to boost their business operations or to establish their company must provide the necessary criteria to become eligible for the loans. Here are some of the essential information regarding eligibility and requirements to get an SME loan in Singapore:

Eligibility Criteria: 

  • The business age requirement should be a minimum of six months up to two years in the industry.
  • Incorporated in Singapore
  • Revenue’s business must be at least S100 million or $300,000
  • Shareholding should be at least 30% under Singapore Citizens or Singapore Permanent Residents.
  • 50% up to 70% government risk-share (SME working loan capital)
  • The financial strength of SMEs consumers (Factoring of Receivables Financing Singapore)
  • Employment size of less than 200
  • CPF-payable employees

Documentation Requirements:

  • Sales Quotation
  • Pro Forma Invoice
  • Sales Agreement
  • Passport copy or NRIC of directors, proprietors, or partners
  • Individual Income Tax Notice of Assessment (NOA) of directors, sole-proprietor, and partners for the last two years
  • Company’s bank statements for the last six months
  • Financial reports or statements for the previous two years
  • ACRA records

These are the general eligibility criteria and requirements an SME must provide to acquire different types of SME loans in the country. 

Application Process:

However, it’s crucial to discuss the specifics regarding eligibility and requirements first with the lender you’re working with so you can proceed to the application process.

The next step is the application process, and here’s what you need to do:

Determine Your Eligibility and Complete the Requirements:

The initial process for a loan application is to determine your eligibility. For one, you’re already eligible since you’re an SME and legally operate in the country.

There are some additional criteria that you must think about, specifically the operation period of your business, shareholdings, etc. Make sure you comply with the standards to proceed to complete the requirements.

Requirements mainly involve documentation. Thus, you must update all your business documents so lenders can quickly assess and approve your application. 

Pick the Best SME Loans Provider:

The global financing industry recognises Singapore for its astoundingly stable financing market. As an SME, you can feel assured you can work with the country’s most professional and credible lenders. Yet, it’s still imperative to pick the best SME loan provider.

You can attain this by comparing each lender’s financial services to SMEs. Compare the monthly or interest rates per annum. Consider the other fees, repayment terms, and whether they specialise primarily in SME loans. 

Choose the Loan Suitable for Business Needs:

Pick the SME loan your business needs the most financial assistance with and discuss the details with the lender.


Decide how much money your business is going to require. To do this, first, you must research and calculate the total of such requirements. Consider whether to purchase a new machine for daily operations. 

Also, it’s wise to never give in to the temptations of taking out more than you can afford to borrow. You have to repay the loan immediately to get returns soon. Thus, only focus on the business priorities to push the operations forward.

Application form for SME Loans:

Fill out the form as truthfully and as accurately as possible. Never leave out any crucial details or information the lender needs to assess your credibility and creditworthiness.

Your data is primarily accessible under the law, and your credit score is available via CBS. Nonetheless, by being honest with this sensitive information, you’re already showing the lender that you’re sincere and a low-risk borrower.

When you’re all done, apply for the loan and await approval.

Be patient:

SME loans take a lot of time. You often have to wait for at least sixty to ninety days. Although it’s an estimate, you must be patient while waiting for the loan disbursement. 

Once the loan amount has been disbursed to your provided bank account, commit to using it for your company. 

Furthermore, comply with the repayment schedule and payments as diligently as possible. Use automatic repayments to help you boost your credit score to avoid late or missed payments. 

Boost Your Business with SME Loans in Singapore

Starting a business from scratch is a challenging task. You must go through trials and errors with your business plans and executions. Moreover, keeping the company afloat is much more complicated than people think. 

So, when issues arise that call for extra funds for your business, feel free to seek diverse selections of SME loans. You have a lot of choices, from government-backed loans or applying from traditional banks or licensed moneylenders in the country. 

The primary purpose of an SME loan is to assist you in boosting your small company to better revenues and increase income in the long run.

For an SME requiring easy and hassle-free personal loan transactions, Accredit can assist you today. Click here now to apply for your business funding needs. 

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