Why Should SMEs in Singapore Consider a Micro Business Loan?

When first starting up or in the midst of expansion, businesses can struggle financially to stay afloat. Some common financial pain points faced by SMEs include having to deal with late incoming payments and unfavourable conversion rates. 

Between needing adequate funds to hire the right talent, incorporating innovative digital solutions to optimise operations and trying to sustain international growth, owners need an inflow of capital to fuel their corporation’s growth. Businesses tend to look to more well-known sources of funding such as bank loans or business incubators or accelerator programs to obtain adequate financial support. However, other types of loans with better interest rates and approval processes might be available to you. One such loan product is the micro loan. 

What is a micro loan?

A micro loan is a viable short-term business loan solution available to businesses in Singapore. At Opal, the approval process is quick and loan amounts are in the range of S$3,000 to S$100,000. It is especially useful when businesses need urgent funding of small amounts of capital to cover overheads during slow months or to have access to more resources during peak periods. Usually SMEs require financial assistance to pay employee salaries, buy new equipment, stock inventory and maintain office rentals.

What are the benefits of a micro loan? 

As banks find that investing in smaller corporations is a risk, SMEs struggle to obtain loans from them. As such, if you require immediate capital relief, this is an excellent option as funds loan requests are processed a single day. Some benefits of micro loans include: 

  • Extremely fast application and approval 
  • Money disbursed within 24 hours (after approval of loan)
  • Attractive rates from 1% onwards p/m

What is the difference between business term loans and micro loans?

The main differences between a business term loan and a micro loan is the total maximum amount that you can borrow, the interest rates and the approval process. Although business term loans allow you to borrow a total sum of up to S$2 million and have slightly lower interest rates, the application process can take longer than micro loans. This is due to the more extensive background and credit checks that need to be done. If you require immediate capital, micro loans would, therefore, be the preferred option. 

Am I eligible for a micro loan?

In order to have your micro loan application be successful, your business would need to be registered here in Singapore and a minimum of 30% of shares held by directors who are either Singaporean Citizens or Permanent Residents. Your business should also be operating for a minimum of 6 months and have a minimum annual turnover of S$300,000.

What types of documents do I require when applying? 

Having the required documents on hand when applying for a micro business loan would ensure you have no hiccups when applying for your loan and that it proceeds smoothly. To prove that your company is a good credit risk, you should provide your company’s bank statements from the past 6 months, identification documents of all directors or guarantors (picture of NRIC), CBS Credit Report and a Notice of Assessment (NoA). You can request for your CBS Credit Report at any of the SingPost branches, at the Credit Bureau office or at CrimsonLogic Service Bureaus. To obtain your NoA, a document prepared by the Inland Revenue Authority of Singapore (IRAS), download a softcopy from the myTax portal or a hardcopy by mail.

Opal’s micro loan solutions for SMEs

Opal (One account for Payment and Loans) offers all enterprises a range of financial solutions. Along with micro loans, Opal’s other financing solutions include business terms loans, revolving credit facility and invoice financing. Our cross-border transfer solutions also offer highly competitive exchange rates which mean more efficient cost savings. Our all-in-one banking platform makes it easy and convenient to track your loans and remittances. With these great terms, you don’t have to worry about cash flow issues any longer. Spur your enterprise’s growth with us today.

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