Any locally incorporated company with at least 30% local shareholding can apply for a business term loan, no matter how big or how small, although some lenders will only lend to private limited companies, so you need to check this.
Different lenders have their respective industry exclusion list which includes but are not limited to:
1. Casinos, gambling &/or gambling equipment
2. Lethal military weapons & equipment
3. Traders in precious metals (retail sales of jewelry is acceptable)
4. Antique dealers
6. Night Clubs/ Bars
7. Money Lenders/ Pawn shops
8. Money Changers/ Exchange/ Remittance
9. Any other businesses which are involved in illegal activities or which could adversely affect the Bank’s reputation
*above stated as a general guideline as, unlike personal loan, business loan credit assessments are more comprehensive and detailed.
Most lenders have a maximum quantum that each company can take up. The amount usually ranges from $300,000 to $500,000 but certain lenders have a higher approval quantum of up to $1,000,000/- or more.
The tenures for business term loans can range from 1 to 5 years. The longer your tenure is, the lower your monthly instalments will be and the more interest you will incur.
All lenders charge a fixed processing fee of 1-2% and some lenders charge an annual fee. Thus, do scrutinise your offer letter closely before signing. Late fees and charges are applicable among all lenders.
Most lenders will require the standard documents listed below for processing:
Latest 6 months company’s operating account
Latest 2 years company audited/ management report
Latest 2 years notice of assessment of directors/shareholders
Photocopy of directors/shareholders NRIC (front and back)
Some may ask for additional documents such as company’s debtor aging list, corporate Notice Of Assessment, GST tax filing, etc.
Different lenders have different credit criteria; an unsuccessful application in one lender does not mean straight rejection from other lenders. But the rule of thumb is that one can apply for a loan again, from the same lender who rejected their initial application, in another 6 months’ time.
Will taking up a business term loan affect my personal residential purchase in the future?
All business term loans will require the company’s directors & shareholders to be the personal guarantors. As per MAS notice 645 TDSR (Total Debt Servicing Ratio) guidelines, 20% of the monthly repayment instalment of any relevant credit facility in respect of which the borrower is a guarantor will be factored into the TDSR calculation.
Depending on the lender, it can take as fast as a week or as slow as a month to get approval. After approval and signing of the offer letter, it will usually take 3-5 working days for the funds to be disbursed.
At Smart-Towkay, we know your questions and concerns when taking up financial products with the banks, thus we are building a growing community financial experts to provide useful tips, news and tricks through our Blog. We work closely with Singapore’s most reputable banks, insurer, government agencies, legal firms and Peer to Peer lending platform to connect SMEs to the partner best for you.
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