SME Business Loan Options in Singapore

Business loans play a vital role for SMEs, startups and small business owners in Singapore. Beyond helping businesses navigate challenging periods, an SME business loan can enhance operational capabilities, drive profitability, and support long-term financial sustainability.

Selecting the right loan option requires careful consideration. From versatile short-term solutions to specialised financing, various business loan products offer different repayment terms, amounts, and purposes tailored to diverse needs.

Most SMEs in Singapore rely on some form of financing to scale. A solid financial history often simplifies approval for a working capital loan or business term loan. Funds help manage economic fluctuations, adapt to market shifts, capitalise on seasonal opportunities, and fuel expansion. Discover more reasons why a loan is helpful for your business to grow, even when it seems like you don’t need one.

Types of SME business loan options

Here are the primary business loan categories relevant for startups, SMEs, and entrepreneurs:

Working capital loans

Working capital solutions address short-term cash gaps, a common challenge for small business owners and entrepreneurs managing inventory, payroll, or supplier payments.

1. Business Term Loan

   The OCBC Business Term Loan delivers a lump sum repaid over fixed instalments with interest, suiting operational expenses, equipment upgrades, or market expansion. As an unsecured SME business loan, it funds up to S$700,000 over 5 years, ideal for SMEs with steady revenue streams seeking predictable payments without collateral.​

   This  loan option features competitive rates starting around 7-10% p.a., with quick digital applications for eligible startups operating at least 2 years. Entrepreneurs can appreciate its flexibility for bridging cash flow while pursuing growth targets.
   

2. Short-term Financing

   Invoice financing, branded as OCBC Short-term Financing, advances up to 80-90% of approved invoices, converting receivables into immediate cash. At rates from 0.6% per month, it supports purchases or sales without tying up working capital, particularly useful for business owners operating in trade or services.​

   Processing is fast, often within days, allowing small business owners to offer competitive client terms like extended payments. This revolving SME working capital loan rotates as invoices are paid, providing ongoing liquidity without fixed tenures.

   Short-term financing can be a harbour for businesses in uncertain times. For more information, read about our comparison between term loans and invoice financing.
   

3. SME Sustainable Financing

   Aligned with the Singapore Green Plan 2030, the Monetary Authority of Singapore has their Sustainable Loan Grant Scheme to further encourage businesses on a green path, providing sustainable financing to meet their sustainability goals.

   Functioning like regular loans in financial terms, these sustainability-linked loans help spur your business on towards green transformations by defraying the costs. OCBC has an SME Sustainable Financing Framework that makes this process simpler for businesses, and also covers areas of funding that include renewable energy, green buildings and sustainable water and wastewater management.

Government financing schemes

There are a range of financing options from the government under Enterprise Singapore’s Enterprise Financing Scheme to support SME lending. Loan default risk, in the case of insolvency, will be shared by the government agency and participating financial institutions like OCBC.

SMEs at various stages of growth can tap on these loans to gain capabilities, create products, and expand overseas.

1. Business First Loan

   The Business First Loan is specially designed to provide funding of up to S$100,000 to young businesses who are six months up to two years in operations. Young startups can benefit from this loan to speed up expansion plans, cover necessary day-to-day expenses, refine existing or develop new products or services and more.

2. SME Working Capital Loan

   The government introduced the SME Working Capital Loan (WCL) to help SMEs across all industries get access to working capital for their business needs. The EFS-WCL has been enhanced to allow a higher borrowing cap of S$500,000.

3. Enterprise Financing Scheme - Green

   Enterprise Financing Scheme-Green (EFS-Green) enables better access to green financing for enterprises that are Project Developers, System Integrators and Technology & Solution Enablers which develop enabling technologies and solutions to reduce waste, resource use or greenhouse gas emissions, especially in sectors of Clean Energy, Circular Economy, Green Infrastructure and Clean Transportation.

   EFS-Green is aligned to the Singapore Green Plan 2030, which identifies a focus on helping local enterprises develop capabilities, build track-record and capture growth opportunities within the green economy to develop a strong pool of enterprises within these sectors. Businesses can apply for the EFS-Green scheme to capitalise on green opportunities.

4. Business Venture Loan

   The Business Venture Loan supports the growth plans of later-stage enterprises like SMEs and start-ups. These businesses, with a group annual sale of S$500m or less, may not have enough collateral to qualify for traditional bank loans. Currently, businesses are allowed to borrow up to S$8m under this scheme.

5. Enterprise Financing Scheme - Merger and Acquisition

   Mergers and Acquisitions (M&A) are not just reserved for large corporations. SMEs can leverage M&As as a strategic tool to grow and expand by gaining economies of scale and acquire market share and capabilities to seize business opportunities. SMEs can get up to S$2 million to finance the acquisition of local or overseas companies with the Enterprise Financing Scheme – Merger and Acquisition scheme.

Fixed assets financing

Fixed assets financing empowers Singapore SMEs, startups, and entrepreneurs to acquire essential long-term assets like commercial properties, equipment, and machinery through tailored commercial property loans and equipment financing options from OCBC.

1. Commercial Property Loan

   Getting a space to call your own is a milestone for business owners. As an owner, you will be able to structure and use the spaces as you see fit to bolster a company culture, thus increasing employee loyalty. Additionally, your business will not need to adhere to strict refurbishment and visitor guidelines or renegotiate with landlords once rental contracts are up.

   The Commercial Property Loan can help your SME better finance this big-ticket purchase. Whether you are looking to purchase a new property or refinance your existing property, your business can borrow as much as 120% of your property purchase price or valuation with a loan tenure of up to 30 years. Your business can also consider retrofitting your existing property for energy efficiency, which can help you save on electricity bills.

2. Equipment and Machinery Financing

   Many small businesses rely on costly equipment to manufacture end-products or to provide services to their customers but buying equipment or commercial vehicles outright can require a significant cash outlay. Our Equipment and Machinery Financing can help your business acquire the equipment it needs, by financing as much as 90% of your equipment or commercial vehicle’s purchase price or valuation. The right investment in equipment or commercial vehicles can boost your business’ performance and enhance productivity. Allowing also to ramp up production, get hold of extra vehicles or improve business processes to protect the environment for future generations.

Summary of the Different Types of Business Loans in Singapore