In this article, we will discuss the eligibility criteria for taking a business loan in Singapore. Also, we will discuss the application process for a loan, the documents required for the loan, and a common reason why the loan is rejected.
What is the application process for a business loan in Singapore?
Business loan Singapore is a good thing to have when you have just started a new business. You also have to know that it takes time for a business to be set up and run on its own. For this, the owner of the business needs to have sufficient funds with him. Here is the list of the application process to apply for a business loan in Singapore.
- Apply online or in the branch
This tells us that there are two ways by which you can apply for a business loan in Singapore. The first thing is that you can apply for a business loan online through the official portal. The other way is that you can physically visit the branch office and fill the application form.
- You will get your first call back from a financial institution
This means that once you have applied for a business loan, the relations manager (RM) will contact you. The RM will ask you about your business and how long have your company been working in the market etc. Also, they will arrange a meetup with the business owner near their office. You will have to be upfront with your company’s financial status to the RM.
- Document submission
There is a total of 5 documents that you will have to submit with the loan application. The most common documents will be the registration of the company, license, and type of business. There are also some extra documents which you have to submit, like upcoming contracts and events.
- Second call from the financial institution
Once all the documents have been submitted, the institution will check them all. After they have checked the documents with the government records. They will give you a call before the initial checking to ask if all the document is provided or not.
- Process for approval
After the submission and checking of the documents by the financial institution and government. The RM will submit the document further for approval of the loan.
- Presentation of business loan approval
Once the application has been approved by the financial institution. The RM will contact the business owner and tell them different loan schemes for their business.
- Site visit
This kind of step will depend on the type of business that you are conducting in the market. If you have a factory or an office building, then the RM will visit the premises.
- Sign documents
Before the business owner signs the documents and approves of the loan. The owner will have to carefully read the terms and conditions of the contract.
- Disbursement of the money
This is the final step of the application process, as you will have to wait for the approval. Then you will have to wait for the money to be transferred by the FAST payment system.
What are the documents required to apply for a business loan?
Below given is the list of documents that you need to submit with the financial institution to get a loan.
- ACRA business profile information
First, the financial institution will require a financing statement from Accounting and Corporate Regulatory Authority. This is the statement that will tell if the company is performing well or not in the market. This is the document that shows how many shareholders, directors, and other people are there.
- Last two years notice of assessment from directors
The company will need their notice of assessment from its directors for the last two years to find the finance. The NOA can be used to define the financial statement of the business and set the loan amount.
- Latest Credit Bureau Singapore (CBS) report
You will need to submit the latest CBS report to your loan company to tell them about the creditworthiness. This contains all the financial statements and data of the company.
- Last two years financial statement
This will depend on the time for which the company has been there in the market. The financial statement contains all the financial entries of the company made in its lifetime. This means it will contain all the debit and credit reports of the company.
- Latest bank statement
The financers will also need a copy of your bank statement to look at the company’s daily transactions. These bank statements will tell the financer the exact number of revenue and expense made by the company. This is because the financers need to make sure that the company can repay the loan back.
What is the common reason for the rejection of SME loans in Singapore?
Here is the list of the common reason why the best SME loan in Singapore is getting rejected or cancelled.
- The company has been newly incorporated
To have a business loan, your company will need to have a good financial background for loan approval. This is why if a new company applies for a loan, it will be cancelled due to no or fewer financial records.
- Loss in the last financial year
If your company is facing loss in the last financial year and you apply for a loan in the next financial year. There is a high possibility that your loan application will be rejected by the financers.
- Low or insufficient revenue
This means when the company has not made enough profit in its working years. Generally, the company needs to make at least S$300,000 to take a business loan.
- Too many existing loans
If the company has taken too many loans already and are yet to be paid back. The application of the business loan will be directly cancelled by the financers.
- The business is in a restricted industry
The business needs to be conducting lawful activities to take a loan. If they are caught doing any wrong business, they will be cancelled immediately.