Get SME Business Loan In Singapore

Introduction

SMEs have become the backbone of the Singapore economy. That being said, much effort is being carried out to sustain the SMEs in Singapore. The main problem faced by SMEs is cash flow problems related funds getting tied in accounts receivable. SME business loans are one of the solutions available but, they are a bit challenging to get through depending on different factors.

                 SME Business Loan In Singapore

Traditional Business Bank Loans

There are different types of bank SME business loans available for businesses. However, the stringent rules and regulation for eligibility make SMEs not cross those barriers. Most bank loans, short and long, focus on well-established businesses and firms as their customer. The low credit value and lack of collateral become some of the reasons for banks to turn down SMEs.

Majority of the banks prefer applications from businesses that have

  • High revenue per year
  • An average bank balance of $10000
  • 1 to 2(or more) years of existence in the market

 These criteria itself becomes difficult for some of the SMEs who are starting out or not been there for long in the market to meet the requirements for application.

There are different business loans that offer different interest rates. You need to be careful while choosing the plan for your business.

The other method that gained popularity when it comes to business funding in Singapore is Invoice financing.

Invoice financing in Singapore

Invoice financing is not a new term in Singapore, especially when it comes to SMEs. Invoice financing is a very commonly used financial solution in Singapore when businesses face a cash crunch. Invoice financing services provide quick funds which help businesses come out of their cash flow problems quickly and grow their business.

Businesses also use invoice financing to maintain long term liquidity by financing their slow-paying invoices. Many businesses keep a long-lasting customer relationship with the financing companies. You need to choose a trustworthy company with whom you engage in financing for smooth functioning.

How does Invoice Factoring work?

Invoice factoring is a financial service where you sell your invoices to a third party known as “factor”. A factoring company lets you sell your invoices in turn for immediate funds based on those invoices.

The application procedure is easy and online, takes very less time compared to a traditional bank loan application. There is no application or processing fee when it comes to invoice factoring. Your application typically gets approved within 3 days and you receive the funding within 24 hours after approval.

This first term payment can be 70-90% f the invoice amount depending on the factoring company you choose to work with. The rest of the amount is extended to you once your customer pays off the invoices.

Invoice factoring is favored by SMEs for its easy application process and less service fee compared to traditional bank loans. Lack of collateral required for the funding is an added benefit.

The stigma around the industry sectors that uses invoice factoring has changed over the years. Now there are more and more verticals that avail factoring services such as:

  • Manufacturing 
  • Electrical shops
  • Textiles
  • Staffing companies

There are other methods through which SMEs try to get funding such as asset, microloans, etc. However, the limitations of various kind become a hurdle to pass when it comes to SMEs.

Finaxar, is a leading financial institution based in Singapore that provides financial services to SMEs and startup businesses. The two different product lines, Receivable financing, and Finaxar credit line focus on the steady growth of businesses. We are committed to providing funds as fast and secure as possible so that your business operations don’t get delayed. Get in touch with us to discuss more on how you can finance your business through us.