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What are the different types of small business loan options available in Singapore

Small business loans is essential for the growth and success of any business. In Singapore, there are a variety of financing options available for small businesses, each with its own set of advantages and disadvantages. Knowing the different types of SME financing options available in Singapore can help business owners make an informed decision on which option is the most suitable for their business.

  1. Bank loans: Bank loans are a popular financing option for small businesses in Singapore. Banks typically offer a variety of loan options such as term loans, overdrafts, and line of credit. Business owners can use bank loans to finance their operations, purchase equipment, or expand their business. However, the process of obtaining a bank loan can be lengthy and requires a good credit history and healthy financials.

  2. Government grants: The Singapore government offers a variety of grants for small businesses, including the Enterprise Financing Scheme ("EFS"). While government grants are a great way to access funding, the application process can be competitive, and difficult to obtain as the loan approval method follows the Banks' credit processes. In short, you will have to be approved by the bank to be approved for an EFS business financing loan.

  3. Angel Investors: Angel Investors are individuals who provide funding to small businesses in exchange for an equity stake in the company. This type of financing is suitable for small businesses that are in the early stages of development and require a significant amount of capital. However, it is important to note that Angel Investors typically want to see a strong business plan and a clear path to profitability before investing.

  4. Crowdfunding: Crowdfunding is a newer form of financing that allows small businesses to raise funds from a large number of people, usually through an online platform. Crowdfunding can be a great option for small businesses that have a compelling story or product and are able to generate buzz and interest from the public. However, it can be difficult to reach the funding goal, and the campaign can be time-consuming to manage. Such options include Funding Societies, Validus, Cash-IN-Asia, etc.

  5. Business Incubators: Business Incubators are organizations that provide small businesses with resources and support to help them grow and succeed. These resources may include office space, mentorship, and networking opportunities. Business Incubators are particularly useful for small businesses that are in the early stages of development, as they provide a supportive environment for entrepreneurs to learn and grow.

In conclusion, small business financing options in Singapore are varied, each having its own set of advantages and disadvantages. Business owners should carefully consider their business needs, goals and the stage of development before choosing a suitable financing option. Bank loans and government grants are great options for established small businesses looking for a more traditional form of financing, while Angel Investors and crowdfunding are suitable for small businesses that are in the early stages of development. Business incubators are also a great way for small businesses to access resources and support to help them grow and succeed.

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