Everything You Should Know About Online Business Loans From Banks In Singapore

Everything You Should Know About Online Business Loans From Banks In Singapore

by Evelyn Addison — 2 months ago in Finance 5 min. read

Obtaining and managing funds is the key to meeting the startup costs or growing a business. Whether you run a small, medium, or large enterprise, you need additional capital to fund large projects or make the most of the latest equipment or technology and increase your revenues.

You can acquire the funding your business needs by applying for a business loan with a leading bank in Singapore. An online business loan can provide you with the necessary capital to fulfil your company’s growing needs.

Singapore is one of the most sought-after locations for business because of its robust business, strong and successful economy, open trade policies, favourable investment environment, better infrastructure, and competent workforce. The other significant aspect luring business owners from all over the world is the availability of various options for business loans.

Business loans have turned out to become the best financial solution for small and medium-based businesses (SMEs). Some reasons for a company to get an SME loan are:

  • Take advantage of the quick growth or expand its operations by entering new markets
  • Buy and increase inventory
  • Build infrastructure
  • Invest in new machinery
  • Meet the day-to-day operating costs
  • Hire new staff
  • Use the latest marketing techniques
  • Avoid cash-flow problems

With appropriate planning and management and timely funding, you can promote your business in the market. Adequate preparation and responsible financial management of a business loan will help your business attain its financial obligations, which is vital.

You can find several options for funding businesses in countries like Singapore, and the government offers a lot of assistance to SMEs. With an online business loan, you can take care of your cash-flow issues. SMEs in Singapore get funding to meet their operating costs, as well as support their expansion or other projects from banks, both public and private ones.

You can improve your business’s cash flow, use new business possibilities, and address fluctuations in sales by acquiring SME business loans from banks, particularly DBS, which assist SMEs with innovative funding solutions. A few of the prominent ones to explain are:

1. SME Working Capital Loans

A business loan is available to SMEs with at least S$ 100 million group income and 200 employees. The Singaporean government partners with banks, providing loans of up to S$500,000 to an SME borrower, with repayment terms of one year and up to five years. SMEs registered in Singapore are eligible to apply for the SME Working Capital Loan and they include ACRA-registered Companies and Limited Liability Partnerships, having 30 per cent of equity owned by Singaporeans/PRs.

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2. Business Loans

The majority of SMEs want to expand or reach out to new markets to compete with other businesses in the market. They will be able to grow their business if they have sufficient cash flow. Business loans from DBS are easier to apply for and acquire than regular bank loans. However, the focus is on the bank’s assessment of your credit. An SME or large business with a healthy cash flow and strong yearly sales is eligible for a business bank loan. Most private banks help SMEs that are not eligible for government-backed loans.

If you are eligible, you can get a loan for up to SGD 500,000 for 5 years at a reasonable interest rate. The other benefits of applying for online business loans with DBS are:

  • Easy online application and use, with information available whenever needed
  • Competitive interest rates that promote savings
  • Digital application procedure

3. Venture Debt Financing

Startups can access additional sources of money and capital, thanks to venture debt financing (VDF). It acts in conjunction with your current venture capital. The loan amount will normally be between 10% and 30% of the total cash you were able to successfully raise throughout the fundraising stage or last financing. VDF allows you to:

  • Reduce overall financing costs
  • Minimise dilution of ownership stakes
  • Advance growth-oriented projects
  • Gain access to capital quickly since lenders prioritise your potential for future growth.

Some characteristics of venture loan financing include:

  • Makes it simple to access DBS global network
  • Increases equity returns
  • Helps attain both flexibility and dilution of equity
  • Provides funding to lengthen the runway
  • Helps deal with seasoned business people

With a workable business idea and plan, your startup can go for venture debt financing.

4. Overdraft Services

SMEs can use an overdraft facility to access a DBS revolving credit line as well. It allows you to withdraw money for operating costs or business expansion up to the approved credit limit. The overdraft facility from DBS is known for its characteristics:

  • Instant access to money via your business account
  • Apply for it easily and quickly by accessing your information whenever you want, and
  • Borrow only the amount you need while paying interest only for the amount used
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5. Account Receivable Purchase

An accounts receivable purchase is a deal that entails capital principal with regard to a business’s accounts receivables. Assets known as accounts receivable represent unpaid invoices, which have not been paid by the customers yet.

With the development and incorporation of new technologies that assist in connecting business accounts receivable information to accounts receivable finance platforms, accounts receivable purchase has become prominent today. In general, a business may find it easier to secure accounts receivable finance than other forms of capital funding. For small businesses, it is particularly true as it can quickly meet the requirements for accounts receivable finance, while big companies can quickly adopt technological solutions.

Some features of DBS’ Accounts Receivable Purchase include:

  • It can free up 90 per cent of your receivables, which can help increase your cash flow.
  • Benefit from credit security against customer default of payments.
  • You tend to get reconciliation services to boost efficiency.
  • You can save time, with the bank taking on the collection responsibilities.
  • Credit protection from the buyer’s default

6. Block Discounting

Block discounting is a way of acquiring a loan with future earnings as collateral. Some businesses, especially credit companies and auto dealers have access to this type of funding. Leading financial institutions like DBS Bank help you out by buying blocks of hire-purchase agreements or lease contracts, allowing you to handle and collect instalment payments by customers.

The bank releases funds based on the agreements that were bought and discounted. You can raise more money by repaying blocks, which helps you have more working capital for further agreements. The banks’ block discounting service helps business owners increase cash flow with funds held in hire or fixed-term agreements.

Some distinctive features of block discounting are:

  • It enables a business to have a source of income, making a profit through funding or loans.
  • Improved cash flow
  • The block discounting facility is safe and dependable in the current unstable economic environment because it does not require an instant payback.
  • You can plan and manage funds with an easy repayment schedule.

7. Supply Chain Finance

Supply chain finance helps to optimise cash flow in the sales, marketing, or distribution channel. SME suppliers are facilitated to receive their payments ahead while allowing their customers to pay after a set time. The business loan facility like supply chain finance covers both buyer and supplier financing.

The financial company helps suppliers and buyers globally by releasing the blocked working capital and lowering supply chain risk with a program-based solution, easy onboarding, and paperless processing.

To conclude, leading banks like DBS have a major role in improving Singapore’s economy by offering businesses, especially SMEs various operational capital loans to enhance their cash flows. SMEs today have easy access to money through online business loans to satisfy their urgent financial needs.

Evelyn Addison

Evelyn is an assistant editor for The Next Tech and Just finished her master’s in modern East Asian Studies and plans to continue with her old hobby that is computer science.

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