Unlocking Growth in Small and Medium Enterprises with SME Loans in Singapore
Running a small or medium-sized enterprise in Singapore can be challenging. One of the major challenges small and medium-sized enterprises (SMEs) are facing is a lack of capital to adapt and innovate, especially in a dynamic business environment.
According to the findings of an Aon study, more than 60% of SMEs are looking for capital from external sources to support their growth goals and address their cash flow issues.
Given this, it is clear that SME loans play a significant part in fostering the expansion of a company.
Financing isn’t just for struggling business owners. Risk-takers and business owners use it. Companies with strong brands take out strategic loans. The purpose is to grow the business.
Although obtaining an SME business loan might appear unfamiliar and intimidating, here are key reasons why business owners should contemplate securing such a loan to unleash the growth potential of their business.
Top Reasons to Take SME loans For Business Growth in Singapore
An SME loan can assist unlock the growth potential of your company for a number of reasons, including the following:
Diversify Your Range of Products and Services
It is a good time to think about expanding your business when the demand from your dedicated customer base signals that they want more products and services. It is possible that this will need you to increase inventory for products that are already available or to add new items to your portfolio.
Increasing the number of products you offer typically requires you to go through a product development phase prior to beginning actual manufacturing, which may necessitate a substantial financial investment.
If a loan is the best option after a comprehensive financial review, it may be a strategic move for your business.
Seizing Business Opportunities
There are instances when one-of-a-kind opportunities present themselves in which a company can reap the benefits of purchasing a certain item at a price that is favourable.
Loans are quite helpful in securing possibilities like these, particularly when the object that is desired is one that requires a significant amount of capital, like a piece of machinery or a vehicle.
Expand to a new location
If your Singapore-based business is on the brink of expansion, it may be advantageous to explore new locations.
After conducting extensive research, you have identified prospective new markets that may be explored, and now it is time to begin making plans.
Whether you require additional staffing in the new market or aim to establish a physical office, an SME loan can provide the necessary funds.
The flexibility offered by an SME loan ensures access to funds tailored to your specific needs for the expansion endeavor.
Buy or lease new equipment
As your company expands, one of the most important things you can do to keep a competitive edge is to upgrade the critical equipment.
The acquisition of a new vehicle for your delivery fleet, the purchase of cutting-edge equipment for your medical aesthetics spa, or the establishment of a central kitchen for your food and beverage business are all examples of what this may entail.
Consider applying for an SME loan in order to satisfy your requirements for equipment if this choice is compatible with your business strategy.
Acquiring a Commercial Property
It is possible that expanding your business may require you to either increase the size of your physical footprint or make a strategic investment in a commercial property in order to improve the portfolio of your firm.
A small business loan can be of great help in turning your dreams into a reality, regardless of the reason you are interested in purchasing a commercial property in Singapore.
Make use of other sales channels.
Through the use of a variety of sales channels, you may also expand your business by reaching out to new potential clients.
Investing in an e-commerce platform to begin selling online, operating a pop-up store at other locations, or even beginning to sell on social media are all examples of what this could imply for a traditional brick-and-mortar firm.
Moreover, investing on new sales channels may require extra funds and an SME loan can be helpful to apply this strategy.
Qualifications for Applying for an SME Business Loan
- Ownership or Local Shareholding: For SME business loan eligibility, certain banks or loan providers need a certain percentage of shareholders to be Singaporean citizens or Permanent Residents (PRs). This meets Ministry of Law requirements that a corporation be “at least 30% owned by Singapore Citizens and/or Permanent Residents.”
- Incorporation of an SME: SME business loans are normally available to registered enterprises with a physical presence in Singapore that are actively operating within the country.
- Annual Sales or Annual Income: Annual sales requirements for loans vary by source. Certain private lenders may require at least S$500,000 in annual sales, although government-backed loans usually cap at S$100 million. Annual income criteria may vary depending on the lender’s requirement.
- Employment Size: Each loan requires a different group employment size, like annual sales. Some loans, like those issued by Enterprise Singapore, demand 200 or fewer employees, while others do not.
- Operating Duration of the Business: Most SMEs require six months of operation before applying for funding.
Discover also the top considerations before getting an SME loan.
How To Apply For A SME Loan in Singapore
Before embarking on the SME business loan application process, it’s crucial to clearly define the purpose behind seeking financial assistance.
Whether it’s for business expansion, addressing cash flow challenges, or handling unforeseen emergencies, understanding your specific needs will guide you in selecting a manageable loan amount.
This not only ensures your ability to meet monthly payments but also contributes to maintaining a healthy Profit and Loss (P&L) statement for your business. Here are four straightforward steps to initiate your SME business loan application:
Step 1: Explore the Lender’s Online Platform
Visit the lender’s website, such as Capitall, which provides a convenient 24/7 online application platform for small business loans in Singapore. This allows you the flexibility to apply anytime and from anywhere.
Step 2: Prepare Required Documentation
Gather all necessary documentation to facilitate the approval of your SME business loan application. The required documents include:
- NRIC or identification details of sole proprietors, partners, principals, and directors.
- Goods and Services Tax statements for the past 12 months.
- Operating bank current account statements for the last 6 months.
- Any specified business banking facility forms issued by the bank (to be completed).
- Completed Enterprise Singapore Enterprise Financing Scheme (EFS) application form if applicable.
- Copy of sole proprietors’ or partners’ Income Tax Notice of Assessment.
- Board of directors’ resolution for your company.
- Constitutional documents of your company, such as the memorandum and articles of association.
- Any relevant professional certificates related to the establishment of the entity, along with identity and proof of business address documents.
Step 3: Choose Loan Tenure and Financing Amount
Decide on your desired loan amount and tenure, allowing you to select the appropriate plan. Additionally, specify the preferred account to receive the funds or provide details for other bank accounts.
Step 4: Obtain Loan Approval with Swift Disbursement
Upon approval of your SME business loan application, the loan disbursement process will swiftly follow. The bank will notify you as the funds are transferred to your preferred bank account, ensuring a seamless and efficient disbursement experience.
SME loan n Singapore is essential for unlocking the growth potential of a business. A loan can be helpful in overcoming capital constraints. Product diversification, seizing opportunities, expanding operations, acquiring equipment, investing in commercial properties and many others can be made easier when lack of funding is handled.
Seeking financial support for your business growth? Contact Capitall now and secure the funds your business needs today!