Use of Funds
Common uses include financing growth, purchasing assets, expanding operations, renovation, and other business-related expenses.
Business financing
Business Term Loan Singapore - Rates, Eligibility & What Banks Assess
A Business Term Loan gives Singapore companies access to structured capital for defined business needs such as growth, asset purchases, operational expansion, renovation, or other business-related expenses.
Flexible business capital
What is a Business Term Loan?
A Business Term Loan is typically an in-house loan offered by banks and financial institutions to businesses. It provides a lump-sum facility that is repaid over a fixed period, making it suitable when a company needs predictable financing for a specific purpose.
A term loan may be considered when an SME is looking for a higher loan quantum, or when the S$500,000 SME Working Capital Loan limit under Enterprise Singapore has been fully utilised.
Loan structure
Key Loan Features
Repayment Tenor
Business term loans usually have fixed repayment tenors ranging from 1 to 5 years.
Interest Rates
Interest rates are generally slightly higher than SME Working Capital Loans, commonly ranging between 7% to 12% flat per annum depending on the bank and company profile.
Assessment readiness
Business Term Loan Requirements
To qualify for a business term loan, businesses typically need to show a stable financial history, clear repayment ability, and a credible business purpose for the loan. Banks may also review the company's cashflow, directors' profiles, existing obligations, and available financial documents.
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Documents Required
Please prepare the following documents so we can evaluate your eligibility.
- Latest 6 months' bank statements
- Latest 2 years' financial statements or latest management accounts
- Copy of NRIC for all directors and guarantors
- Latest 2 years' Notice of Assessment for all directors and guarantors
FAQ
FAQ About Business Term Loans in Singapore
What can a business term loan in Singapore be used for?
A business term loan in Singapore can be used for expansion, office or outlet renovation, asset acquisition, hiring costs, technology investment, and working capital to support larger contracts or seasonal demand. Unlike the SME Working Capital Loan - designed for day-to-day operational expenses - a business term loan is typically better suited for medium-to-long-term investment purposes. Lenders will generally want to understand the specific purpose of funds at application, as vague or unclear use-of-funds can slow approval or reduce the offer.
What interest rate should I expect for a business term loan in Singapore?
Business term loan interest rates in Singapore vary based on whether the facility is secured or unsecured, the company's credit profile, and operating history. Unsecured business term loans typically carry flat rates of approximately 7% to 12% per annum depending on profile, while secured facilities backed by property generally carry lower rates. A 10% flat rate approximates roughly 18% EIR over a 5-year tenure. Banks will also factor in total existing debt service obligations, sector exposure, and personal guarantee terms.
What do banks look at when assessing a business term loan application in Singapore?
Singapore banks assess business term loan applications by examining: the company's revenue trend and profitability (from financial statements), cash flow adequacy (from bank statements), existing debt obligations and debt service coverage, industry risk and business model sustainability, the personal credit history and net worth of directors and guarantors, and the clarity of the loan purpose. A business with declining revenue, multiple credit facilities already outstanding, or inconsistencies between financial statements and bank statements will face a harder approval path.
Do I need a personal guarantee for a business term loan in Singapore?
In most cases, yes. Business term loans in Singapore - whether through traditional banks or EFS-backed schemes - typically require a personal guarantee from the company's directors or major shareholders. This means that if the company defaults, the guarantor's personal assets are at risk. Some alternative lenders and digital banks may have lighter or no personal guarantee requirements for smaller facilities, but this often comes with higher interest rates or lower loan amounts.
Is there a government-backed business term loan available in Singapore?
Yes. The Enterprise Financing Scheme (EFS) administered by EnterpriseSG provides government co-sharing of credit risk on eligible SME financing facilities, including business term loans. Under the EFS, EnterpriseSG shares a portion of the default risk with participating financial institutions - typically 50%, or up to 70% for young enterprises. The borrower still repays 100% of the loan amount - the government backing reduces lender risk, not borrower liability.
How long is the repayment period for a business term loan in Singapore?
Business term loans in Singapore typically have repayment tenures ranging from 1 to 5 years, with some secured facilities extending to 7 years or longer. EFS-backed SME facilities are generally capped at 5 years. Matching the loan tenure to the expected life of the asset or project being financed - rather than simply maximising tenure to minimise monthly repayments - is a sign of disciplined financial planning that lenders also respond well to.
