Question 1

What business loans are available to Singapore SMEs?

Accepted Answer

Singapore SMEs can access: (1) SME Working Capital Loan — up to S$500K, 6–9% p.a., 5 years, for day-to-day operations; (2) Enterprise Financing Scheme (EFS) — up to S$500K, 4–7% p.a., co-funded by Enterprise Singapore with lower effective rates; (3) Trade Financing — tied to invoices/trade transactions, typically 6–10% p.a., up to 1 year; (4) Equipment/Asset Financing — up to 90% of asset value, 4–7% p.a., up to 7 years; (5) Property-Secured Loans — lowest rates (~3–5% p.a.), up to 25 years, using commercial property as collateral.

Question 2

Who is eligible for an SME Working Capital Loan in Singapore?

Accepted Answer

To qualify for most Enterprise Singapore-backed schemes (including EFS), your business must: be registered and operating in Singapore; have at least 30% local shareholding; have annual revenue not exceeding S$100 million or employ no more than 200 employees. Banks may apply additional credit criteria including years in operation (typically ≥2 years), profitability, and credit history.

Question 3

What is the Enterprise Financing Scheme (EFS)?

Accepted Answer

The Enterprise Financing Scheme (EFS) is administered by Enterprise Singapore and allows SMEs to access bank loans at lower rates, with the government sharing a portion of the lending risk. Under EFS-SME Working Capital, SMEs can borrow up to S$500K with a government risk share of 50–70%. The lower risk for banks translates into lower interest rates for borrowers compared to unsupported commercial loans.

Question 4

How is the monthly repayment on a business loan calculated?

Accepted Answer

Business loans typically use reducing balance (amortising) repayments. The formula is: Monthly repayment = P × [r(1+r)^n] / [(1+r)^n − 1], where P is the loan principal, r is the monthly interest rate (annual rate ÷ 12), and n is the number of monthly repayments. Early payments are mostly interest; later payments shift more towards principal reduction.

Question 5

What is the effective interest rate (EIR) vs flat rate for business loans?

Accepted Answer

Business loans quoted as reducing balance rates are already the effective interest rate — the rate you actually pay on the outstanding balance. This is different from personal loans sometimes quoted as 'flat rates', where the headline rate is applied to the full principal throughout the loan term. Reducing balance rates are lower-sounding but represent the true cost. Always confirm whether a quoted business loan rate is reducing balance (effective) or flat.

Question 6

Can I repay a Singapore business loan early?

Accepted Answer

Most Singapore bank business loans allow early repayment. However, some lenders charge an early repayment fee (typically 1–2% of the outstanding balance) if repaid within the lock-in period, usually the first 1–2 years. Always check the loan agreement terms before committing. For EFS and government-backed loans, early repayment terms may differ — consult your lender.

Month	Payment	Interest	Principal	Balance
1	S$6,221	S$1,250	S$4,971	S$195,029
2	S$6,221	S$1,219	S$5,002	S$190,026
3	S$6,221	S$1,188	S$5,034	S$184,993
· · ·
36	S$6,221	S$39	S$6,183	S$0

Scheme	Max Loan	Typical Rate	Lenders
SME Working Capital Loan	S$500K	6–9% p.a.	DBS, OCBC, UOB, Standard Chartered
Enterprise Financing Scheme	S$500K	4–7% p.a.	Participating FIs + EnterpriseSG
Trade Financing	Varies	6–10% p.a.	Most major banks
Equipment Financing	90% of asset	4–7% p.a.	Banks + finance companies
Startup SG Loan	S$100K	~8% p.a.	Banks with ESG guarantee

Scheme	Max Loan	Typical Rate	Tenure
SME Working Capital Loan	S$500K	6–9% p.a.	Up to 5 years
Enterprise Financing Scheme (EFS)	S$500K	4–7% p.a.	Up to 5 years
Trade / Invoice Financing	Varies	6–10% p.a.	Up to 1 year
Equipment / Asset Financing	90% of asset	4–7% p.a.	Up to 7 years
Property-Secured Loan	Varies	3–5% p.a.	Up to 25 years
Startup SG Loan	S$100K	~8% p.a.	Up to 5 years

Business Loan Calculator Singapore 2026

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