Top 5 SME Business Loan Options in Singapore for 2025
Singapore’s SME sector is the backbone of the economy, contributing to employment and economic growth. However, many small and medium-sized enterprises (SMEs) struggle with cash flow issues, working capital needs, and expansion costs. To address these challenges, various financial institutions and government-backed schemes provide SME business loans tailored to different business needs.
In 2025, there are multiple financing options available, but choosing the right one depends on your business type, financial health, and funding needs. In this guide, we’ll explore the top five SME business loan options in Singapore and how you can secure the best financing for your business.
1. SME Working Capital Loan (WCL) – Government-Assisted Loan
Overview:
The SME Working Capital Loan (WCL) is a government-backed loan program initiated by Enterprise Singapore, in collaboration with local banks and financial institutions. The government co-shares the risk with lenders, making it easier for SMEs to access much-needed working capital.
Key Features:
✅ Loan amount: Up to S$500,000
✅ Loan tenure: Up to 5 years
✅ Interest rate: Varies by lender
✅ No collateral required
✅ Government risk-sharing: 50% – 70%
Best For:
- Businesses needing short-term liquidity
- SMEs facing cash flow challenges
- Companies recovering from economic downturns
Eligibility Criteria:
- Registered and operating in Singapore
- At least 30% local shareholding
- Annual turnover ≤ S$100 million, or ≤ 200 employees
How to Apply:
- Apply through participating banks like DBS, OCBC, UOB, or financing platforms.
- Prepare necessary documents such as financial statements, IRAS filings, and ACRA business profiles.
2. Unsecured Business Term Loan
Overview:
Unsecured business term loans are offered by most banks and do not require collateral. They are ideal for businesses looking for quick financing without pledging assets. These loans can be used for business expansion, inventory purchases, hiring staff, or other operational needs.
Key Features:
✅ Loan amount: S$50,000 to S$500,000
✅ Loan tenure: 1 to 5 years
✅ Interest rates: 6% – 12% p.a. (varies by bank)
✅ No collateral required
✅ Faster approval time (as fast as 24 hours)
Best For:
- SMEs that need quick and flexible funding
- Businesses with a good credit rating
- Companies that don’t have assets to pledge as collateral
Eligibility Criteria:
- At least 2 years of business operations
- Minimum annual revenue of S$200,000 – S$500,000 (varies by bank)
- Good business and personal credit rating
How to Apply:
- Compare different banks and financing platforms like DBS, OCBC, UOB, and Standard Chartered.
- Prepare financial documents such as bank statements, financial reports, and income tax returns.
3. Business Overdraft Facility
Overview:
A business overdraft is a revolving credit line that allows SMEs to withdraw funds beyond their available account balance, up to an approved limit. Unlike traditional loans, interest is charged only on the amount used.
Key Features:
✅ Credit limit: Varies by business profile
✅ Interest rate: 7% – 12% p.a. (charged only on used amounts)
✅ Repayment: Flexible, no fixed monthly installment
✅ Short-term financing solution
Best For:
- Businesses with irregular cash flows
- SMEs needing short-term emergency funds
- Companies managing seasonal revenue fluctuations
Eligibility Criteria:
- Business must be at least 1 year old
- Good business credit score
- Requires an existing business bank account
How to Apply:
- Approach your business banking provider (e.g., DBS, OCBC, or UOB).
- Provide bank statements, business financials, and credit reports for assessment.
4. Invoice Financing (Factoring Loan)
Overview:
Invoice financing, also known as factoring, is a loan that allows businesses to borrow against unpaid invoices. This is particularly useful for SMEs that deal with large corporate clients who take 30 to 90 days to make payments.
Key Features:
✅ Loan amount: Up to 80% of invoice value
✅ Loan tenure: Until invoice is paid
✅ Interest rate: 1% – 3% per month
✅ No collateral required
✅ Immediate cash flow access
Best For:
- SMEs with long customer payment cycles
- Businesses that sell to government agencies or large corporations
- Companies in trading, logistics, and services sectors
Eligibility Criteria:
- Business must have a history of invoice-based transactions
- Invoices must be due from reputable corporate clients
- Minimum annual revenue of S$100,000
How to Apply:
- Apply through banks (DBS, OCBC, UOB) or fintech lenders like Validus, Aspire, or Funding Societies.
- Submit invoice details and past transaction records.
5. Equipment and Machinery Loan
Overview:
Equipment loans help SMEs purchase business assets like machinery, technology, or vehicles. The equipment itself acts as collateral, reducing risk for lenders and making approval easier.
Key Features:
✅ Loan amount: Up to 90% of equipment value
✅ Loan tenure: Up to 5 years
✅ Interest rate: 4% – 8% p.a.
✅ Asset-based financing, reducing collateral requirements
Best For:
- Manufacturing, construction, and logistics businesses
- Companies investing in new or upgraded machinery
- Businesses needing technology or vehicle financing
Eligibility Criteria:
- Business must be registered in Singapore
- Equipment must be used for business operations
- Company should have a stable revenue stream
How to Apply:
- Approach banks, leasing companies, or government-backed financing providers.
- Submit vendor quotations, business financials, and a business plan for assessment.
Final Thoughts: Which SME Business Loan is Right for You?
Choosing the best SME business loan in Singapore depends on your company’s needs, financial standing, and growth plans. Here’s a quick comparison table to help you decide:
| Loan Type | Best For | Loan Amount | Interest Rate | Repayment Period |
|---|---|---|---|---|
| SME Working Capital Loan | General working capital | Up to S$500,000 | Varies | Up to 5 years |
| Unsecured Business Term Loan | Flexible funding needs | S$50,000 – S$500,000 | 6% – 12% p.a. | 1 – 5 years |
| Business Overdraft | Short-term emergency funds | Based on credit line | 7% – 12% p.a. | Flexible |
| Invoice Financing | Managing cash flow gaps | Up to 80% of invoice | 1% – 3% per month | Until invoice is paid |
| Equipment & Machinery Loan | Asset financing | Up to 90% of asset value | 4% – 8% p.a. | Up to 5 years |
By assessing your business’s financial health and loan options carefully, you can make informed decisions to secure the best funding for your SME’s growth in 2025. If you need assistance navigating these financing options, consider working with a loan brokerage firm to get tailored loan recommendations and better approval chances.