How Long Is A Small Business Loan Term In Singapore?

 

Small businesses in Singapore have a variety of options when it comes to securing funding for their operations. One popular option is a small business loan, which can provide the capital needed to expand operations, purchase equipment, or cover other expenses.

But how long is a small business loan term in Singapore? The loan term can vary depending on the lender and the specific loan, but generally, such loans have a tenure of one to five years.

This article will explore the different types of small business loans available in Singapore and their respective loan terms.

We will also look at how and where to apply for the correct loan tenure for your business and give tips on managing your loan repayment.

What Are Small Business Loans?

Such a loan can be used to purchase equipment, inventory, or machinery to operate or grow your business. It would also help to provide capital to cover these costs and facilitate cashflow. Let’s look at a case study.

John is a small business owner who needs a small business loan to purchase inventory for his bookstore. He has a steady stream of customers and sales but lacks the upfront capital to buy new products to sell.

Without the loan, John may not grow the business or meet customer demand. With the loan, he could purchase the inventory and potentially increase their revenue.

But what is the best small business loan for John?

Small and medium-sized enterprise (SME) business loans are financial products designed to fund SMEs.

These loans are usually offered by banks, government agencies, licensed money lenders, and other financial institutions to help businesses get working capital, fund equipment purchases, expand, and more.

Some examples of small SME business loans include:

  • Term loans: A traditional business loan usually used to finance long-term investments such as equipment purchases or real estate.
  • Lines of credit: A revolving loan that allows businesses to borrow money as needed up to a specific limit, and pay interest only on the amount borrowed.
  • Invoice financing: A loan allows businesses to borrow money against outstanding invoices. It’s a popular option for businesses with a steady stream of invoices and cashflow needs.
  • Merchant cash advances: A loan based on a business’s future credit card sales.

These loans typically have different interest rates, loan terms, and repayment options so businesses can choose the best fit for their needs and finances.

You may ask, “how long is a small business loan term if I take out any of these options?”

We’ll explain this in subsequent sections of this article.

What Are The Business Loan Options In Singapore?

In Singapore, there are a variety of business loan options for SMEs to help them grow and expand their operations.

Some of the most popular options include:

  • Enterprise Singapore (ESG) loan: This loan programme is aimed at helping SMEs to grow and internationalise. It offers financing solutions for working capital, equipment purchases, expansion, and other business needs with a loan term of up to five years.
  • Business Angel Scheme: This loan provides funding to SMEs in Singapore with a loan term of up to five years.
  • Bank loan: A loan that can be obtained from a bank. It is usually secured by assets such as property or equipment, and typically has a longer repayment term than other types of SME loans.
  • Equipment financing: This is specifically used to purchase equipment for a business, typically with a loan term of up to five years.
  • Government grants: A scheme that provides funding to eligible SMEs for specific projects or activities. It’s an excellent option for businesses looking to innovate or improve their operations.

It would help to stay updated on the different options to determine the best fit for your business’s needs, finances, and the intended use of the loan.

If you’ve ever found yourself asking questions like “what are small business loan options in Singapore?”, “how long is a small business loan term?” and “what are the best options?”, we are now at the section that offers the insight you need.

How Long Is A Small Business Loan Term?

Regarding business loans, one of the most recurring questions people often ask is “how long is a small business loan term?”

The loan term or tenure for a small business loan can vary depending on the lender and specific loan, but generally, they range from one to five years.

Some small business loans may have a repayment term of up to 10 years. The loan term refers to the time you have to repay the loan.

Generally, the longer the loan term, the lower the monthly payments, but the higher the overall interest paid.

For example, a term loan of $50,000 with a repayment term of three years will have a higher monthly payment than the same loan with a repayment term of five years.

But the total interest paid over the life of the loan will be lower with the three-year term loan.

Hence, it’s essential to consider the loan term when applying for a small business loan, as it will affect the amount of the monthly payments and the overall cost of the loan.

In Singapore, the loan term for small business loans is about one to five years. This is in line with the government’s effort to provide funding to SMEs to help them grow.

However, some loans may have a longer loan term, up to 10 years. These loans are usually for lower amounts, usually up to $50,000.

When choosing a small business loan, get one that aligns with your ability to repay the loan. This will determine the loan term.

If you want to know how long is a small business loan term, you can check out a variety of lenders, including Katong Credit, to get a clearer idea.

How And Where To Apply

It’s not enough to ask “how long is a small business loan term?”. It’s equally important to know how and where to apply.

The bank, money lender or financial institution you approach for a loan also determines the kind of loan tenure available to you.

There are various places to apply for a small business loan in Singapore such as:

  • Banks: The most common way to apply for a small business loan is through a bank. You can visit the website or branch of a bank in Singapore and enquire about their small business loan options. Some popular banks that offer small business loans in Singapore include DBS Bank, OCBC Bank, and United Overseas Bank.
  • Government agencies: ESG provides financing solutions for small businesses in Singapore. You can visit their websites to learn more about such loans and how to apply.
  • Licensed money lenders: A reputable and more importantly – licensed – money lender like Katong Credit can be a good bet if you need funds urgently.

When applying for a small business loan, it is essential to have all the necessary documents, such as financial statements, business plans, and proof of income.

In addition, it would help to have a good credit score and solid business plan to increase your chances of getting approved for a loan.

Compare the interest rate, fees, and other terms and conditions of different loan options before deciding. Consult with a financial advisor or a business mentor to get guidance on applying for a loan and to ensure that the loan will benefit your business.

Rather than spend valuable time wondering how long is a small business loan term for my business if I have fair credit, send a message to Katong Credit today and have a customised business plan designed for you.

Personal Loan Vs Business Loan

Personal and business loans are both types of loans, but they are used for different purposes and have some key differences.

A personal loan is a loan taken out by an individual for personal use, such as debt consolidation, home improvements, or a vacation.

Personal loans are typically unsecured, meaning they do not require collateral and are disbursed based on your creditworthiness and income. Their loan terms usually range from 12 to 60 months, and the interest rate is usually fixed.

On the other hand, a business loan is taken out by a company for business-related expenses such as purchasing inventory, expanding operations, or hiring employees.

Business loans are typically secured, which means they require collateral such as real estate or equipment, and based on the business’s creditworthiness, revenue, and financial statements.

Their loan terms are up to five years, and the interest rate is usually variable.

In summary, personal loans are for personal use, unsecured, and typically have a shorter repayment term and a fixed interest rate.

Business loans are for business use, secured, and typically have a longer repayment term, and a variable interest rate.

Get A Small Business Loan That’s Right For You

Money shouldn’t be the reason your business doesn’t start or grow the business of your dreams.

If you’re still wondering how long is a small business loan term in Singapore, then it’s time to reach out to Katong Credit.

Meet customer demands for your small business by applying for a small business loan with us.

We offer quick approval and business loans at lower interest rates. Contact us today or apply for a loan now to kickstart your journey to boosting your business growth.

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