How Long Is A Small Business Loan Term In Singapore?

Written by Shannon Wong on March 14, 2023

If you’re looking for a small business loan in Singapore, it pays to consider the best business loan terms. 

Banks and licensed money lenders have different loan terms for the financing options that are expressed in months or years. 

As a general rule of thumb, if the length of your loan term is long, you may pay low interest. But, you may find your interest is much higher in the long run. Conversely, if your loan term is short, you may pay a high interest as the lender expects the money back sooner.

In this article, we help you understand how long is a small business loan term. This will help you make a sound decision when applying for a business loan.

What Are Small SME Business Loans?

Small SME business loans in Singapore helps small and medium-sized businesses manage their expenses or tide through business fluctuations.

Businesses can use the loans to cater for start-ups, daily operations or any other opportunity that may arise. For example, a business can use the loan for purchase of new equipment etc. 

These loans don’t need any collateral but there is a need for a director’s personal guarantee. Beside, it’s easy to get the loans.  Also, they have less stringent eligibility criteria during application.

SME owners have many options of the loans to choose from such as line of credit, invoice financing, and bridging loans among others.

Fortunately, a good licensed money lender or a bank can advise on the best SME loans in Singapore.

To anyone planning for a new start-up with no or little track business record, SME financing in Singapore work well to meet such needs.

Again, the application process for SME loans is less tedious. You can apply within minutes in the comfort of your home through an online process. And once your lender approves your loan, it’s disbursed to your business account. 

But, what happens if you apply and don’t qualify for an SME loan?

Why Borrowers Fail To Qualify For Small Business Loans

There are loads of reasons why your lender may deny your loan application. Below are some of the common reasons:

Business Ownership

An SME must be registered in Singapore and have at least 30% owned local shareholding held by Singaporeans or permanent residents. 

Note that lenders are reluctant to issue loans to SME owners who don’t meet this criterion.

Track Record

A borrower has to provide a proven track record. The record helps to show the business’s existence and profitability. Lenders may need at least six months of existence. A good example is OCBC. Again, some banks may ask for at least two years of incorporation for you to be eligible for the loan.

Credit History

A low credit score raises questions. Lenders will deem you to have a high chance of being a defaulter. On this, licensed money lenders are more lenient to borrowers with poor credit history compared to banks.  Nonetheless, it would pay to track your business score before you apply for a loan.

While there are many types of SME loans, their terms vary. Below is how long they can be.

How Long Is A Small Business Loan Term?

There are many types of small business loans with different repayment periods. You may opt to take any type of business loan package depending on your business needs.

Normally, lenders in Singapore offer most business loans over a period of up to five years. 

You may ask, “Why does the length of the loan matter?”

Why The Length Of Your Loan Matters

The length of a loan is the duration it takes for a loan to be fully paid. The lender sets the duration to help the borrower pay off the loan gradually over its term. 

The length of a small business loan is not the only factor to consider when applying for a loan. Yet, the information can help you calculate your affordability, and the ability to make your loan repayments. At the same time, this may assist you to budget your repayments. 

Note that failure to pay within the time frame may attract late fees among other charges. Thus, your lender should specify the terms of repaying the loan in the agreement.

An SME owner who wants to pay high monthly installments can choose a shorter loan term. With this, one will pay less on the total interest.  A long-term loan will have lower monthly installments but in the end, this attracts high overall interest.

You can take advantage of the many loan options available and choose the best that meets your needs.

What Are The Business Loan Options In Singapore?

Whether you have an existing business or want a start-up, you can qualify for a business loan.While these loans require no collateral, the lenders require a borrower to meet certain eligibility criteria before a loan approval.

Below are several options and their loan term:

Startup Business Loan

A startup business loan is also referred to as a first business loan. It’s pretty easy to get a startup business loan compared to term business loan as there is less emphasis on the business track record. 

The lender offers a smaller cap compared to other loans, of up to $100,000. You can use the loan to expand the business or even make property rentals or purchases among others.

Though banks vary, the loan tenure can go up to four years.

Business Loan

A business loan is open to all kinds of businesses, even those that are ineligible for government assisted loans.

You can get a business loan from any bank. Some of the best banks for business loans are DBS, UOB, and OCBC.

The repayment period for banks is up to five years. Licensed money lenders may have shorter repayment period.

SME Working Capital Loan (WCL)

WCL is best for businesses that need working capital. It’s available to Singapore registered SMEs that own at least 30% of the local shareholding. 

As a way to support the lending, the Singapore government co-shares the risk of borrowing amount which is up to 1Million per borrower. The loan is repaid within one to five years.

Loans For Shorter Terms

Most banks and licensed money lenders offer short terms loans whose repayment period is within one year. Yet, some may extend the period to two years.

With no need for collateral, you can use a short term loan to cover your unexpected expenses.  Again, you can negotiate for flexible repayment terms and once done, your approval is complete within minutes. 

Unfortunately, due to the short nature, you pay higher interest rates compared to other loans. Yet, again, the loan amount may not be used to finance huge purchases or manage permanent investments. 

While it’s easy to qualify for short term loans, you need to be careful to only apply for what you can repay within the stipulated time.In case of failure to pay, you become prone to late fees and other penalty charges.

How And Where To Apply

Before you take any loan, consider your options and apply for what you can pay off comfortably.  You can choose to deal with a bank or licensed money lenders in Singapore.

The lenders provide different loan packages. Again, their eligibility criterion is different.

Once you select the SME loan that best suits your needs, the next step is to get ready all the necessary documents to apply for the loan. 

Below is what you need:

  • Proof of director’s personal income.
  • Business financial reports. Most banks require at least two years of financial report.
  • Latest six months bank statements.
  • Director’s IC copy for identity verification and Notice of Assessment (NOA).
  • GST Form F5 for businesses that are GST registered.
  • Debtor’s and creditor’s ageing list.


There are many banks to choose for your SME loan application such as DBS, UOB, OCBC, and more. Banks lend higher loan limits. However, they require more stringent eligibility criteria. 

If your SME loan is rejected, you can choose a licensed money lender.

Licensed Money Lenders

Only choose a money lender from the list of licensed money lenders in Singapore to avoid falling victim to loan sharks. 

Licensed money lenders have fair interest rates that are easy to manage, fast loan approval, and flexible repayment plans. Unfortunately, your lender may decide on the amount to lend depending on its estimates of your ability to repay the loan.

If SME loans in Singapore are not an option, there are alternatives. You can negotiate the terms with your current bank, use your credit card, and borrow from friends. Or you can choose to apply for a personal loan. 

A personal loan has less stringent eligibility criteria. Also, the loans have a longer repayment period of up to seven years and once you qualify, you can get the loan within a few days. 

Besides, the loan amount may be less depending on your income. You can borrow up to four times your monthly income. 

Choose The Best Small Business Loan In The Market

As a borrower, you can use a small business loan for many purposes. Once you know how long is a small business loan term, it becomes easy to tide through your tough times. 

If you need SME financing in Singapore, contact 1AP Capital or simply apply for a loan and enjoy the best loan terms. It’s one of the best licensed money lenders. 

We offer a wide selection of loan packages depending on your business needs.

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