business loan singapore interest rate

Best SME Business Loan Interest Rates: a Comparison Guide (2022)

During these hard economic times, a business loan would be the perfect solution for your business. Despite many people’s fears, business loans are a relatively low-risk venture for both credit provider and borrowers alike. 

As a business owner looking for funding to grow your small business, business loans are an easy way to start the process off on the right foot. This blog post will provide answers or thoughts on many important topics concerning small businesses in today’s world, such as: 

  • A comparison of the various types of SME loans
  • What type of credit provider exist, and how they could help your small business 
  • What kind of loan rates are available to get started in today’s marketplace

Best Government-Backed Loans

In this article, we’re going to cover the differences between the Temporary Bridging Loan and the SME Working Capital Loan, how they differ, what you’ll need to provide, and how much you’ll need to qualify for either loan.

These government loan options are some of the best SME loans that can be used to fund your business. 

Loan Maximum Loanable Amount Loan Tenure Interest Rate Government Risk Share
SME Working Capital Loan Up to $1M / borrower 5 years Subject to PFIs’ assessment of risks involved. 50%. 70% risk-sharing may be offered to early-stage companies.
Temporary Bridging Loan S$3 Million / borrower 5 years Capped at 5% p.a. 70%


1. SME Working Capital Loan

A scheme designed by Enterprise Singapore, a Singapore government agency that champions enterprise development and is responsible for business loans in Singapore like the Fixed Assets Loan. It is meant to fulfil the need for businesses that do not need access to debt capital or raise equity finance from venture capitalists but still require a working capital loan. 

Like the SME micro loan, this loan provides business financing for operational cash flow needs such as inventory replenishment, raw materials, and unfinished goods purchases, payroll payments, etc. These are common in small-scale manufacturing or service business enterprises. 

The maximum loan amount is up to $1M per borrower, with a repayment period of 5 years. Risk-sharing is usually 50%, but early-stage companies may receive a 70% offer. Interest rate is subject to Participating Financial Institutions (PFIs) risk evaluation.

To qualify for the loan, you must:

  • Have a registered business entity in Singapore that is physically based there
  • Own 30% or more of the local equity, either directly or indirectly, by Singaporean(s) and/or PR(s), in accordance with ownership composition.
  • The SME definition of “working capital” refers to Group revenues of up to S$100 million or a maximum group employment size of 200.

2. Temporary Bridging Loan

The Temporary Bridging Loan Programme (TBLP) allows businesses to secure temporary financing. Working capital is the money needed to cover short-term cash flow shortages. This includes paying VAT, wages, and suppliers’ invoices.

The maximum loan amount is $3 million per borrower, with a repayment period of 5 years. The interest rate for this business loan is capped at 5% per annum with a government risk share of 70%.

To qualify for the SME Working Capital Loan, you must:

  • Be a Singapore-registered business entity with a physical presence on Singapore soil
  • Have a business directly or indirectly owned by 30% or more Singaporean(s) or Singapore PR(s), as determined by the ultimate individual shareholders

Note that this business loan was intended to end on March 31, 2021, but extended until September 30, 2021.


Best Banks offering SME Business Loans

Banks offer a variety of small business loans and medium enterprise loans, but because banks are not as willing to risk a loss, these are loans are often divided to a specific business need. This can include funds for daily operations, your employees’ monthly salary, kickstarting a new business, and more.

Some of the loan options you can find with different banks include but are not limited to:

  • Startup business loan
  • Working capital loans
  • Equipment financing
  • Trade financing
  • Micro loans
  • Property financing

Before applying for a business loan, there are many things to consider. The most vital is your provider. It is important to look at and compare the numbers to find the best SME loans in choosing a bank.

Interest rates, for example, are a major factor in deciding which bank to go for. Most banks say that they offer “competitive” rates, but if borrowers don’t know how those rates are calculated, they can sometimes miss out on getting the best deal possible for their money.

SME Business Loans offered by Banks Maximum Loanable Amount Repayment Period Interest Rate Processing Fee Early Repayment Fee
DBS Business Loan S$200,000- S$500,000 Up to 5 years 10.88% per annum 2% of the loan amount 2.50%
OCBC Business First Loan S$100,000 Up to 5 years 10.88% per annum 2% of the loan amount 5%
UOB Bizmoney Loan S$350,000 Up to 4 years 10.88% per annum 2% of the loan amount, 6.88%
UOB SME Loan S$100,000 Up to 3 years Per bank assessment 2% of the loan amount 6.88%
Maybank Business Term Loan S$500,000 Up to 5 years Up to 10.88% per annum 2% of the loan amount <Discuss with bank>
Standard Chartered Business Instalment Loan S$300,000 Up to 3 years Up to 11% per annum Default fee: S$100 5% if redeemed within first twelve months, 3% of amount thereafter.


1. DBS Business Loan

DBS is one of the largest banks in Singapore, providing competitive interest rates for the majority of business loans they offer.

Among the 12 financing options available are business term loans and asset loans. Thus, making it a suitable option for SMEs from diverse industries. The DBS Digital Bank Loan, in particular, allows business owners to obtain financing of up to S$200,000 for repayment over a period of up to 5 years. Moreover, in the first 12 months of this business loan, applicants may only be responsible for the interest costs since the loan is covered under the Resilience Budget.


The business should be physically located and operated in Singapore. A minimum of 30% of the business should be owned locally. This loan is an unsecured business term loan, which means there is no collateral required. 

2. OCBC Business First Loan

OCBC’s Business First Loan has a cap of S$100,000 and a maximum repayment period of 4 years. In addition, they offer a 50% discount on facility fees if you apply online through OCBC’s website before 31 July 2021. Similar to most SME loans, the online approval process is fast and secure.


Applicants need only to have been in business for six months to qualify.

The loan does not require any collateral or paperwork. Still, at least one Guarantor (Singaporean or Permanent Residents 21 years old and above with an annual minimum income of S$30,000) is required.  

3. UOB Bizmoney Loan

BizMoney Loans offer a loan capacity that is up to a maximum of S$350,000. There’s a 5-year maximum repayment period as well. Currently, the effective interest rate on this loan is 10.88% per annum, with a 2% facility fee (also known as a processing fee). It’s also worth noting that there is an annual fee of S$500. 

This loan is ideal for start-ups looking to upscale as they can avail of a quick microloan up to $100,000 with no collateral needed for over 4 years.


Private limited companies, partnerships, and sole proprietorships established in Singapore over the past 3 years are eligible for this loan.

4. UOB SME Loan

The UOB SME Loan offers up to $100,000 in financing for small businesses. However, repayment periods are shorter, lasting a maximum of three years.


The business must at least be a year old, and at least 30% of it should be locally owned, with stakeholders owning more than 50% of the equity. In addition, the business should not have more than 200 employees, and annual turnover should be less than S$100 million. 

5. Maybank Business Term Loan

Maybank’s Business Term Loan is a suitable choice for small businesses seeking a hefty amount of business financing. SMEs may secure this loan worth up to S$500,000, with loan repayment terms of up to 5 years. 


To qualify, your business must have at least 30% local ownership, have been established for at least three years, and have a minimum annual revenue of $300,000. 

Additionally, you are required to provide documents to back up your application, namely; SME Banking Consent Form, bank statements for the previous 6 months, Income Tax Notices of Assessment of guarantor(s) for the last 2 years, photocopy of NRIC (front & back) of guarantor(s), and if applicable, financial records in the last 2 years.

6. Standard Chartered Business Instalment Loan

Standard Chartered Business Instalment Loans are collateral-free and offer loan repayment terms of up to 3 years for loans between S$70,000 and S$300,000. While the actual interest rate on this loan will vary, it is currently capped at 11%. 


To qualify, your business must be registered in Singapore, be operational for a minimum of three years, and have a minimum annual turnover of $750,000. In addition, the business must have at least 50% Singaporean and PR ownership.


Alternative Financing Options

1. Credit Line

Your business is given a line of credit to draw from – up to a predetermined amount. It’s similar to the standard business loan but without the lengthy pledge period and much lower interest rates. So business owners have more freedom and flexibility to borrow funds according to their needs. 

You can repay your credit line over time by submitting regular instalments (at a fixed rate) or making set payments when certain milestones are reached (like when you sell products). This option is ideal for businesses that need capital on short notice, or cash flow isn’t as readily available as income from sales.

2. Invoice Factoring

Invoice factoring is a financing solution that allows you to exchange your outstanding invoices for cash. This cash can then be used to fund your operations or act as a capital injection for company growth. Many businesses cannot get traditional financing because they lack collateral, but this method gives you access to the funds that you need without putting up the company’s assets.

3. Personal Loans

If you’ve had trouble previously getting traditional loans, or if you’re risk-averse, personal loans may be an excellent alternative. It allows the borrower to repay their debt with manageable payments on a schedule that works for them.


Business Loan FAQ’s 

  • What is the average interest rate of Business Loans in Singapore?

Business loan interest rates for SME loans in Singapore range from 1-13% per annum. 

Secured loans with collateral pledged to most banks typically have lower interest than unsecured loans without collateral.

  • How long does it take for a Business Loan to be approved?

The duration of a business loan application varies based on the loan providers or financial institutions.

The application process of most credit providers can be swift, with some lasting as little as 24 hours, while others can take several business days.

It’s recommended that you prepare all the documents required and (in some cases) prepare a thorough business plan so that the business loan application can be as fast as possible.

However, it might be ideal for applying for personal loans in an emergency instead of using them on your business.

  • What should I keep in mind when choosing a business loan?

Small businesses should weigh these three most critical factors in choosing between different loan providers: interest rates, repayment terms, and loan size.

    • Interest rates. There are many different interest rates available to small businesses; therefore, it is important to research each provider thoroughly. 
    • Repayment terms. A small business loan may have a fixed rate or an adjustable rate. Fixed rates offer long-term use but are expensive initially, while adjustable rates offer short-term use but are cheaper in some cases. Borrowers should consider whether they will be able to pay back their loan as scheduled and, if so, what length of time this will take. 
    • Loan size. Business loans are available for many different amounts, and business owners should compare the cost of each loan to their financial needs.
    • Trustworthiness of the credit providers. Government schemes and bank loans are usually trustworthy, but when it comes to other credit providers, make sure they have a good reputation and that they follow the regulations of the Monetary Authority of Singapore.


Still not sure which Business Loan is the best for you?

The best business loan is the one that addresses your specific financial need. To get the best deal possible, an applicant company should evaluate the terms and conditions and the potential benefits of each type of loan and decide which will best suit their needs at that time.

If you’re looking for a business loan and need help making a decision, don’t hesitate to reach out to us at Instant Loan.

Instant Loan is a loan comparison site that helps address your business financing needs by providing you with a curated list of offers from the top financial institutions in Singapore.

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