Financing is crucial for the success of businesses, especially small and mid-sized enterprises. Whether you’re just starting a new business or seeking to grow a current one, you will likely require business financing at a certain point in the form of a business loan. A business loan can provide you with the working capital needed to confidently start or grow your business. They can be used to purchase necessary equipment, expand commercial property rental, and ensure the smooth operation of business activities. 

There are multiple types of business loans. You may choose the one depending on your business needs and situation. Understanding the types of business loans and how they work can help you secure the best loan for your business and enjoy its benefits in the long run. 

What is a Business Loan?

A business loan is a type of financing businesses use to cover costs associated with running, managing, and expanding the business. Companies can get this loan from traditional banks, neobanks, online lenders, and credit unions. From working capital to equipment purchases, inventory, and real estate, business loans can be used for multiple purposes.

When you apply for a loan, you will need to tell the lender how you plan to use the funds. Common uses of business loans include:

• Cashflow for day-to-day business expenses
• Real estate purchases
• Equipment purchases
• Inventory purchases
• Startup costs
• Business expansion
• Refinancing

Types of Business Loans Available in Singapore

Singapore is well-known for its generous support for small and mid-sized businesses. You can find the best business loan in Singapore to start or grow your business. Below are the types of business loans available in Singapore that you should consider if you need financing for your company.

Standard Business Loan

The standard business loan is an unsecured loan that does not require any security. If you need quick cash to expand or overcome new business challenges, a standard business loan might be enough. A basic business loan can offer you S$100,00-350,000 with a repayment term of up to 5 years. This loan requires the company to have at least one or two years of activity in their industry. These loans have an interest rate, early repayment fees, and processing fees, which the chosen bank determines. All prominent Singaporean banks, such as DBS, UOB, and OCBC, offer this kind of loan to local businesses.

Startup Business Loan

This is a small version of a standard business loan as it offers a smaller cap of up to $100,000. Obtaining a startup business loan is significantly easier than a regular business loan because it requires a shorter operation duration and a shorter financial history. Some examples of startup business loans available in Singapore include First Business Loans, SME Micro Loans, SME Venture Loans, and Startup Loans for Doctors and Dentists.

SME Working Capital Loan

This is a government-subsidized loan that offers up to S $1 million financing per borrower to small and medium-sized Singaporean enterprises. The SME working capital loan tenure is five years and is available to all Singapore-registered companies that are 30% Singaporean-owned. Moreover, businesses must have up to 200 employees and earn at least S $100 M yearly.

Financial Benefits of Business Loan

Maintaining a steady cash flow is essential for all businesses. The company needs substantial operating cash to run business activities smoothly. Here are the benefits of business loans, showing how these loans can benefit your business.

Flexibility: Business owners can apply for various kinds of loans, either short-term or long-term, depending on their ever-changing business requirements.

Liability-free: You don’t have to meet any specific income level or collateral requirements before applying for a lawn. Some fintech companies like Fazz Business don’t require you to provide collateral for your business loan.

Improved Business Credit: Acquiring business loans can boost your business credit, which also boosts the cash flow.

Increased Promotions: When you have enough funds, you’ll have more opportunities to use effective marketing strategies and promote the business.

Expanding the Product Offerings: By securing a business loan, you meet the manufacturing costs and expand the product line, which helps grow your business.

Best Business Loans in Singapore

Singapore banks offer the best business loans with affordable interest rates. If you’re a small or medium enterprise owner, below are the best business loans available in Singapore that will be enough for your needs.

DBS Business Term Loan

If your business has a strong track record and stable annual sales, consider this traditional loan from Singapore’s largest bank. DBS offers a wide range of business loans with competitive interest rates ranging from 7% to 11% annually that can suit any business. DBS Business Term Loan is most attractive among businesses due to the maximum loan amount of up to S$500,000 and tenure of up to five years. DBS may offer lower interest rates for desired borrowers. Most importantly, all Singapore-registered companies can apply for this loan.

OCBC SME Loan

OCBC’s SME Loan is relatively startup-friendly and can provide up to S $100,000 amount, payable in up to four years. The eligibility requirements for OCBC SME Loan are not strict. You can easily apply for this loan if your company is six months old. Additionally, you can apply for the loan online, and it will take 50% off your fees. Its easy terms make it reliable and accessible. Startups looking for zero paperwork, a convenient process, and modest expansion sums will find this loan an excellent option.

UOB SME Loan

Next on our list is UOB, which offers various business loans with competitive features. The UOB’s SME Loan provides businesses with up to S $300,000 of maximum loan amount with a generous payment period of 1-5 years. However, the bank will assess the interest rates depending on the loan amount and individual basis. One drawback is that annual fees for UOB’s loans are higher than other major banks like DBS and Standard Chartered. The fee can be up to $500, depending on the type of loan.

Fazz Business Loan

If you’re looking for the best business loan in Singapore with competitive interest rates, fast approval, and a fair loan amount, Fazz Business Loan might be an excellent option for you. Fazz Business is a leading Singapore neobank that offers accessible business financing to expand your business with a fixed-term loan, revolving credit line, and installment credit line. You can get a loan of up to S $300,000 with a low interest rate starting from only 1% a month.

Whether you’re a Singaporean or foreign business seeking to secure a loan for your SME, Fazz Business has got you. Fazz serves foreign businesses of all sizes, aiming to establish their company in Singapore. 

Why Fazz Business Loan is the Best Loan Option Available in Singapore

Applying for a business loan with Fazz is relatively simple and can be done within minutes online. Traditional banks can take as much as 5-6 weeks to process your loan application because they handle hundreds of thousands of applications daily. However, one of the standout features of Fazz Business is that your loan will be approved in 48 hours. You also have the opportunity to convert your loan into a revolving credit line, which allows you to repay and reborrow the funds to suit your evolving business needs. 

Another benefit of this loan is that it doesn’t require you to pledge collateral. This makes Fazz Business Loan the best option for small and mid-sized businesses looking for instant access to cash without inexpensive fees.