Guide To SMEs Business Loans

As the world battles the impending economic recession, many businesses feel the pressure of having to remain afloat amidst financial burdens. Business owners are increasingly concerned about accessing loans during this period, as well as how to manage their debt in a shrinking economy. Loans can be a lifeline for many businesses, providing essential capital for growth and expansion.

Business loans are an invaluable source of funding for small and medium enterprises (SMEs) during a recession. They provide SMEs with the liquidity needed to continue operations, pay employees, purchase goods and services, and invest in their business. This ensures that businesses have the necessary funds to stay afloat during difficult market conditions.

Why Should SMEs Apply For Business Loans


Business loans offer SMEs more flexibility than other financing options. Business loans offer greater access to capital and more flexible repayment terms. They also typically involve less paperwork, shorter approval process and most require no collateral – so businesses can receive funding quickly if they need it in a pinch or if they’re looking to expand rapidly.

Favourable Terms

Furthermore, the terms are often favorable for SMEs due to the fact that lenders understand the difficulties these businesses face during a recession. Many financial institutions now offer special deals specifically designed for SMEs.

Many lenders offer flexible repayment terms so that customers can pay off what they owe in installments, ensuring repayment is convenient and manageable. Some lenders provide reduced or fixed interest rates as an incentive to become a loyal customer. This could save businesses money in the long run and help them achieve better financial stability.

Additionally, borrowers can use their funds as they please without any additional fees or restrictions. This makes it easier for SMEs to access working capital quickly while still having the freedom to manage their finances according to their own specific needs.

Tailored Financing

Business loan providers also have experience providing tailored solutions that meet individual needs, allowing entrepreneurs to focus on their core operations while still keeping financial matters in check.

Loans can be tailored to meet the specific needs of an individual business, allowing them to obtain financing that is right for their particular situation. This means that businesses have access to the funds they need without having to worry about paying back too much or taking on unwieldy debt obligations.

Types Of Business loans for SMEs

SME loans can be used for a variety of purposes, such as purchasing new equipment, expanding the business’s inventory and investing in marketing campaigns. With the right loan option, SMEs can access funds quickly and easily without a major outlay of cash upfront.

If you are running an SME, you should browse through different loan options and choose the one that best fits your business needs.

SME Working Capital Loan

In 2016, the Singapore government introduced the SME Working Capital Loan (WCL) to help SMEs that require funding for cash flow or business expansion.

Under this scheme, SMEs in Singapore can apply for loans of up to S$600,000 for loan tenure of up to five years.

SME Working Capital Loan is a great option for SMEs to access the funds they need to successfully manage their business. It provides them with quick access to short-term capital, enabling them to cover working capital expenses such as inventory costs, wages and taxes. This loan is an ideal solution for businesses that need a little extra help in times of financial strain but don’t have the resources or credit history to secure traditional financing methods.

The loans are designed specifically for SMEs who require access to liquidity without long-drawn-out application process or high interest rates that come with other types of financing.

Benefits of SME Working Capital Loan

Access to Cash On Hand

You’ll be able to address cash flow issues by gaining access to the working capital. Even profitable businesses can become insolvent if they simply cannot pay their bills. A rapid expansion phase, in fact, is unquestionably risky, because you will need to make upfront investments in employees, equipment, or inventory before your new clients begin to reimburse you.

Quick Access to Funds and Swift Repayments

You can place a quick loan advance to be held and be repaid quickly. Working capital loans are set up to make sure that you often have immediate access to funds while having the ability to get back to all your regular activities.

Commercial Property Loan

Commercial property loans are becoming increasingly popular as more businesses look to purchase and/or refinance their real estate holdings. Whether it’s for a retail store, office building, warehouse or other business-related purpose, you can finance up to 80% of the purchase price or market valuation of your commercial property.

You can choose a fixed or floating interest rate, with loan tenures as long as 25 years. Commercial property loans can also be packaged with overdraft and trade facilities.

Benefits of A Commercial Property Loan

Commercial Property Ownership

Owning your commercial premises provides your business with stability, allowing you to plan and make strategic decisions that can benefit your company’s growth.  Having a building gives you freedom in terms of design and layout, and also long-term planning.

When leasing commercial properties, businesses must account for rising rents or other changes in the agreement that could affect financial security. However, when owning your premises outright, it’s easier to manage costs efficiently and build up capital for future investments. This business asset can potentially increase in value, so it’s a worthwhile long-term investment.

Lower Interest Rates Compared to Other Business Loans

Commercial property loan rates are typically higher than those for individual mortgages, but are still less than typical small-business loan interest rates because your property is used as collateral, and your lender will be keener to give you a more favourable rate.

Tax Rebates and Incentives

Furthermore, when buying a commercial property you will only need to pay a flat rate of 17% for corporate tax which is lower than the personal tax rate. Additionally, businesses in Singapore are entitled to various rebates and incentives on corporate tax, which will lower your tax burden.

Business Term Loan

A business term loan is a popular way for businesses in Singapore to access capital. It is an agreement between a lender and borrower that sets out the amount of money borrowed, repayment schedule, and interest rate over a fixed period of time. This type of financial product can be secured or unsecured and offer businesses more flexibility when it comes to funding their operations.

Business term loans can be categorised into long-term and short-term loans. It is commonly used by companies in Singapore to cover expenses such as inventory purchases, marketing campaigns, equipment upgrades or expansion projects. These funds can also be used for any other project that would help the business grow and increase its profitability. Lenders usually charge an interest rate on the outstanding balance, with monthly installments due according to the agreed terms. For borrowers with good credit ratings, some lenders may even offer additional incentives, such as reduced interest rates or longer repayment periods.

You can apply for a business term loan with fixed monthly repayments over 5 years and a cap of SGD $500,000 on the loan amount. For an unsecured loan that doesn’t require collateral, you don’t have to use your assets as collateral – instead, you can use your assets and resources to take your company to the next level.

Benefits of Business Term Loans

Build Good Business Credit

Applying for a long-term loan helps you build your credit score. As you establish your business, it will become necessary to establish a good credit history you can continue to rely on in the future. From then on, you’ll have the ability to scale your company with the assistance of credit without relying upon private investors, who may require you to hand over some of the control of the business.

Emergency Funding

Short term business loans provide financial assistance for urgent situations. A short-term loan may help you out of a cash crunch, allowing you to purchase equipment, or fulfil some other objective.

These funds can be beneficial in the event of sales decline or if you have trouble meeting operating expenses, such as payroll. There is no restriction to how you can use the funds from a business term loan.

Project Financing

Project financing is an increasingly popular option for businesses when seeking capital to move forward on a project. Project financing involves the development of a particular project and its associated risks, with creditors providing finance based solely on the cash flow generated by that specific project. It gives businesses greater flexibility in terms of repayment plans, which can be tailored around cash flow or profit streams generated from the project itself.

Project financing has become increasingly attractive as it enables companies to access large sums of money without sacrificing majority ownership or control over their business operations.


Steps to Securing A Business Loan

Securing a business loan can be a daunting process, but is an important step for businesses looking to invest in their future growth. To help make the process easier, here are some simple steps that need to be taken when applying for a business loan.

Assess Your Current Financial Situation

When planning for a business loan, it is pivotal to understand the financial situation of your business. You need to determine how much funding you need. Having an accurate figure will help lenders understand your borrowing needs and what kind of terms they can offer you.

Research Different Lenders

Next, research different lenders and compare interest rates and repayment terms, so you can find the best deal available. Be sure to consider any fees associated with the loan, as these can add up quickly.

Complete Your Application

Once you have chosen the lender, it’s time to complete the application form. Make sure all required information is filled out accurately and provide any supporting documentation that may be needed, such as bank statements or tax returns.

In conclusion, applying for business loans during a recession can be beneficial to SMEs looking to stay afloat and capitalize on economic opportunities. Business loans provide access to vital funds that can help a business remain competitive and secure its future in the long-term, despite any current economic turbulence. Furthermore, the ability to leverage business loans increases over time as loan terms improve with a company’s track record and credit history.

Engage Inland Capital Services for Your SME Business Loan Needs

Our team is made up of expert business financing consultants who use their experience and business savvy to obtain financing facilities and provide advisory services on government grant and finance schemes.

We understand the challenges common to SMEs that span many industries. We use our knowledge and expertise to craft pragmatic solutions for the unique needs of each business, always aiming for long-term sustainable growth and profitability for each business.

Engage our expert consultants to get the most suitable loan for your business needs. Our business loan solutions include working capital loan, commercial property loan, business term loan, project financing, micro loan, import financing/letter of credit, factoring, machinery & equipment financing, floor stock financing, private funding and overdraft.