How to get a startup business loan without collateral in Singapore?

Banks don’t rely on your assets since it’s an unsecured loan. So, your business plan should be brief, viable, and convincible to crack through.

Work on your business plan and fix the flaws to make it exemplary. Financial institutions weigh your plan based on current market affairs, trends, competition, and your implementation strategy.

The odds of securing a collateral free business loan in Singapore are relatively low if your business plan isn’t foolproof.

Those who have been in the business world for a few years know how hard it is to build a decent credit score.

Even minor payment mishaps can bring it down and make it hard to catch up. Lenders check your credit score to analyze your creditworthiness and repayment pattern.

A good credit score can improve your chances of securing a business loan without collateral.

How long you have existed in the startup world also matters to the lender before they decide to sanction your collateral free business loan.

The interest rate and tenure vary significantly for a new startup and a grown organization. Some financial institutions favor startups more, while some give importance to matured enterprises.

Being one of the effective startup loans without collateral, OCBC gives the necessary push to the startups by providing them with unsecured loans.

The eligibility factors are simple to meet.

• Your business should have been started less than three years ago.

• You should not have more than ten employees

• Your annual turnover shouldn’t be more than SGD 1 million

• 30% of the company shares should belong to a Singapore citizen.

You should also find a guarantor who should be a Singapore citizen and between the age of 21 and 62. 

At this stage, startups wouldn’t like wasting time on time-consuming banking procedures. To your relief, all you need to submit online is

• A fully filled online form

• Bank statements

• Notice of assessment (recent copy)

Your business loan without collateral is here, and you haven’t spent more than a day on it. That’s what OCBC aims to achieve. 

Post pandemic, DBS bank has started issuing startup business loans without collateral, primarily focusing on micro and small businesses.

Their loans mainly cater to the working capital and liquidity needs of the startups. They can borrow up to SGD 1 million. 

There are two different loans available for different capital needs

Temporary bridging loan:

When an already registered and running business is in need of financing needs, they can apply for this no collateral, quick processing loan.

The maximum amount that they can get is SGD 1 million. Here are the requirements that you need to meet.

• 30% of the company shares should be possessed by a Singapore citizen

• The business should have been registered and operated in Singapore

• Should find a guarantor who must be a Singaporean citizen

Here are the documents you will have to gather.

• If you are applying through the ACRA platform, they will recover a majority of your business info through that. 

• If required, you will need to produce your financial statements from 3 months to 3 years, depending on the sanctioned amount.

SME capital loan:

This loan is offered when you have exhausted the loan amount offered through a temporary bridging loan and are still in need of funds.

The repayment tenure is 1 to 5 years, and the maximum borrowing limit is SGD 300,000.

Eligibility criteria are almost the same as the bridging loan. If it’s a consolidated group of companies, the total turnover shouldn’t be more than SGD 100 million, or the total number of employees shouldn’t cross 200.

DBS has an affordability calculator available on its website. You can calculate the interest and the monthly repayment amount.  

Grow your business with UOB’s collateral free business loan, where you can get up to SGD 8 million. Quick response and processing time and funding assistance through government schemes are their exemplary benefits. 

Requirements:

• Bank statements of the past six months

• Singpass credentials

• Other loans and liabilities particulars

• If you are a private limited company, then produce the memorandum and articles of association

• Partnership agreement letter for partnerships

They have 3 plans depending on your money requirement and stage of your business.

Temporary bridging loan - Working capital business loan with no collateral up to SGD 1 million offered in collaboration with Enterprise Singapore.

SME Working capital loan - Jointly offered by Enterprise Singapore and UOB, this collateral free business loan up to SGD 3 million.

UOB Bizmoney - Unsecured loan for SMEs where you can get a maximum of SGD 350,000

ESG financing scheme is introduced by the Singapore government to share the risk of unsecured loans with financial institutions in the cases of borrower insolvency. 

Standard Chartered offers business installment loans up to SGD 300,000. The maximum repayment period is 3 years, and this is a business loan with no collateral.

There is an annual fee associated with this loan which is 2% of the approved loan amount. 

Eligibility criteria to meet:

• Should be a Singapore registered business

• Business should be in existence for at least 3 or more years

• 50% of the company shares should belong to a Singapore citizen

• Minimum turnover value should be SGD 750,000

Requirements:

• Personal identification proof of directors and partners involved in the business.

• Tax statements for the past four quarters

• Memorandum and articles of association and board of directors resolution

• Filled application form

• Bank account statements of the company for the past six months

Standard Chartered business loan is best for those who expect quicker loan processing and access to other business banking services all under one roof.

Related read - Guide to opening business bank account in Singapore

When you can repay your loan in a stretchy, relaxed period, your monthly dues will be negligible.

In collateral free business loans, the tenure period is usually long (between 3 to 5 years) in regards to the amount obtained. That gives you the freedom to lay back and pay off the debt without impacting your cash flow.

Not everyone is backed up with expensive investments and assets to pledge. Startup business loans without collateral give an opportunity to everyone to expand their business.

You don’t have to wait for months to get the money and spend it. Fintech companies take no time to process collateral free business loans if the applicant has every document they need.

If you don’t have a credit score or have low scores, you can pick it up by taking an unsecured loan. By building a good repayment history, you can make your way to a solid credit score.

You have nothing to lose as there is no collateral involved. Businesses see their worst when they miss paying a few dues of a secured loan.

Interesting read: What are employee savings schemes and their importance?