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A Guide to Applying for SME Capital Loans in Singapore

There’s no denying that many people dream of being their own boss, which explains the rise of entrepreneurs in Singapore. With an increasing number of people chasing their dreams to build their own businesses, it also brings about the realisation that the road to success is fraught with several challenges.

It is essential for businesses to have reliable sources of funding to ensure that operations can run smoothly on a daily basis. While running a business comes with inevitable risks, being well prepared for such risks can minimise the potential problems caused by a shortage of funding. Many businesses only consider taking up a capital loan when they find themselves cash-strapped. However, understanding capital loans and investing in them early on can allow you to seize crucial business opportunities knowing your finances are in order. For those who’re wondering how to go about applying for a working capital loan, check out our useful guide on everything you need to know about your financing options!



Why You Need A Capital Loan

Whether you’re just starting up your business or you’re looking to expand, having enough working capital to finance your daily operations is important to cover expenses and keep your business going. A capital loan is basically a loan you can obtain from a bank or from other institutionalised lenders to finance costs such as wages, rent and debt payments — especially when your business is under financial stress.

Many companies do not have a steady stream of income throughout the year which can be attributed to a multitude of reasons. For instance, businesses in the manufacturing industries often experience cyclical sales which results in periods where business enters a lull period. In order to continue covering the daily operational expenses, a capital loan will help you overcome such periods, and the loan can be repaid when business picks up.



When You Should Apply For SME Capital Loans

When it comes to running a successful business, one of the keys to managing your finances is to have a plan that takes into account any potential cash flow issues that may arise in the future. As every business has different functionalities, understanding the nature of your business will help you formulate a plan most suited to your business needs. This will allow you to start initiating loan applications when your company is financially stable.

Unfortunately, many companies only seek funding help when they face financial difficulties. As capital loans are based on your repayment ability, there is a chance that capital loans can be declined by lenders at the time you may need it most. Hence it is always advisable to seek these financing options when your company is in its best financial shape.



Where To Apply For SME Capital Loans

There are several options when it comes to choosing where you want to get your capital loan or term loan in Singapore.  SME capital loans in Singapore are usually offered by banks, financial institutions or alternative lenders.

Banks in Singapore provide various SME capital loan options, however, obtaining approval can be a tedious process for many SMEs. Another option SMEs can look at would be financial institutions that usually function as specialised lenders and have loans suitable for asset-based lending such as equipment loans.

ETHOZ Capital is a participating financial institution for the Enterprise Financing Scheme (EFS) under Enterprise Singapore. The aim of this partnership is to offer SMEs a variety of loans such as the Working Capital Loan, SME Fixed Asset Loan and the Temporary Bridging Loan.



Types of SME Capital Loans


Working Capital Loans

For SMEs that are looking for a source of funding to finance your daily operations, a working capital loan is the most suitable option. At ETHOZ Capital, the working capital loan scheme is targeted at SMEs that have a group revenue of up to $100 million or a maximum employee count of 200. For companies that are eligible, you can apply for a loan amount of up to $1 million dollars.


SME Fixed Assets Loan

If you’re looking for a loan to finance the investment of domestic or overseas fixed assets, the SME Fixed Assets Loan will be a suitable option for you. The SME Fixed Assets Loan can be used for the purchase of equipment for upgrading purposes as well as construction or purchase of government and commercial built premises for your business. If you are eligible for this loan, you can secure up to $30 million dollars.


Temporary Bridging Loan

The Temporary Bridging Loan Programme (TBLP) provides access to additional working capital for SMEs to fund their business needs. Under this scheme, eligible companies can secure a loan amount up to the $5 million dollars with an interest rate capped at 5%. To help manage debt and control cash flow, companies can also apply up to 1-year deferral of principal repayment,  subject to assessment by the Participating Financial Institutions.


Working Capital Loan Singapore

Even with a variety of options to choose from, navigating your unique needs and challenges to identify a capital loan that best works for your business can be rather challenging. If you need some assistance in further understanding your options, our experienced relationship managers can help you out with this and recommend a financial solution, after considering your requirements. Simply give our team at ETHOZ a call at 6654 7799 or drop us an email at today!

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