Entrepreneurship | Guides | Singapore

1 Dec, 2023

How to Get a Business Loan for Your Startup in Singapore

Explore the intricate landscape of startup financing in Singapore with this all-encompassing guide. Delve into the nuances of obtaining a business loan for your startup, understanding the different types available, and mastering the application process.

Getting access to capital is one of the biggest challenges facing startups and SMEs in Singapore. While bootstrapping is possible initially, most early-stage ventures require external financing to fund their growth plans. Equity funding from angel investors and VCs can be an option but often comes with significant dilution for founders. This is why startup business loans have become an important alternative funding avenue for many entrepreneurs.

The Landscape for Startup Business Loans in Singapore

Singapore has devoted considerable resources to cultivating a vibrant ecosystem for startups and small-medium enterprises (SMEs) to thrive. Various government agencies like Enterprise Singapore, SPRING Singapore, and IE Singapore administer financing programs, grants, and loans explicitly designed to address capital access challenges startups face in their early stages. While helpful, these financing options come with thorough application processes assessing business viability.

At the same time, most traditional financing sources like banks remain wary of startups’ limited operating history and inherent risk. Their strict eligibility criteria make it difficult to qualify for typical SME bank loans or lines of credit without strong financials and revenue streams already in place.

This gap in the financing landscape is where startup business loans emerge as crucial funding channels for a significant proportion of early-stage enterprises in Singapore. Startup loans allow entrepreneurs to leverage future earnings potential to secure financing and are more forward-looking assessments of business viability than just hard numeric qualifications.

Types of Startup Business Loans in Singapore

Before evaluating the different options, it helps to understand what constitutes a startup loan. Key characteristics include:

  • Explicitly designed for early-stage, high-growth startups
  • Flexible loan quantum tailored to company needs
  • Require fewer financial reporting prerequisites
  • Higher-risk loans, so interest rates are higher as well

Sources of financing startups can access in Singapore generally fall into a few main buckets:

Government Assistance Loans & Programmes

As developing local enterprises is a key national priority, various Singapore government agencies administer loans, grants, and programs targeted at helping startups. The most popular ones include:

  • Enterprise Singapore Startup SG Loan - Tailored for eligible early-stage startups, providing combined equity and loan financing. Typically, it ranges between S$30,000 to S$300,000 based on entity type and developmental stage when applying.
  • SPRING Singapore SME Micro Loan - Caters to startups and SMEs with flexible repayment terms and quick access to funding. Quantum is capped at S$100,000 with interest rates starting from 5.5% per annum.
  • Temporary Bridging Loan Programme - Providing working capital financing for local companies to sustain their operations during the ongoing COVID situation. Eligible applicants can receive loans of up to S$1 million.

Loans from Banks & Financial Institutions

Beyond government lending schemes, traditional and newly established banks have also recognized startups' financing needs and potential as customer bases. Hence, they are expanding debt offerings catered to fund startups' growth cycles, including:

  • SME Working Capital Loans - Traditional banks like DBS, OCBC, and UOB have SME lending programs to fund daily working capital expenditures and operating budgets for smaller companies trying to preserve cash flows. It may require some basic financial reporting documents.
  • Commercial Loans - Larger and more established startups with over S$1 million in annual revenue can approach banks for customized commercial lending packages with more competitive rates to finance growth. Approval is based on financial position rather than collateral.
  • Venture Debt - An emerging class of specialist investors focused exclusively on lending to startups typically already backed by equity venture capital. Venture debt providers accept higher risk in return for higher yields and economic upside through equity warrants.

Alternative Financing Options

As startups evolve, there are also alternative financing channels beyond conventional institutions:

  • Incubator & Accelerator Funding - This intensive boot camp-style developmental program offers mentorship, connections, and even some initial equity-free funding to help startups hit initial milestones before raising larger external rounds.
  • Crowdfunding Platforms - Startups are increasingly tapping on the power of crowdsourced fundraising from a distributed base of investors contributing smaller sums. Leading platforms like Fundnel, FundedHere, and Crowdo aggregate thousands of potential investors.
  • Angel Networks & Venture Capital - For eligible startups meeting criteria at growth stages seeking seven to eight-figure sums, venture capital, and sophisticated angel investment groups may provide larger equity financing from extensive networks. Examples include SIG, Headstart, Wavemaker Partners, and many more.

Therefore, while still evolving, there are increasing avenues for creative entrepreneurs to access meaningful startup funding in Singapore tailored to their specific business requirements and stages.

Qualifying Criteria Used by Lenders and Investors

Since most early-stage startups don’t have extensive financial track records and assets to pledge, traditional eligibility criteria based solely on past revenue, profits, and collateral may not apply directly to startup business loans in Singapore. Some common aspects evaluated include:

Business Viability Assessment

  • Market Opportunity - Evaluating if the startup addresses a meaningful customer pain point with a sizeable addressable market
  • Business Model - Assessing the sustainability and defensibility of how a startup delivers and captures value
  • Traction & Growth - Early sales, customer adoption, and metrics that show market fit and demand
  • Projections - Modeling of key assumptions on growth drivers to demonstrate a path to profitability

Capability Evaluation

  • Founding Team - Relevant experience, expertise, and networks to successfully execute the business
  • Advisors & Investors - External validation of business prospects by associations with other established founders, subject matter experts, or marque investors
  • Operational Plan - Demonstrated understanding of key business drivers and milestone roadmap.

Risk Management

  • Macro Risks - Factoring broader market and industry trends that may influence the likelihood of projected success
  • Contingency Planning - Stress testing key assumptions to account for unexpected internal or external variability

Necessary Documents Needed for Loan Application

Preparing a professional loan application package is key to securing financing. Some common documents needed include:

Business Executive Summary

This high-level overview document should clearly summarize key aspects of your business, including the problem you solve, target customers, products or services, operations model, current traction, team background, market landscape, competition, financial projections, funding needs, and intended use of proceeds.

Aim for a 10-15 slide deck highlighting the core business proposition and growth opportunity. Avoid overly text-heavy slides with industry jargon. Demonstrate your domain experience and commitment through concise insights that build investor confidence.

Financial Statements and Supporting Documents

Lenders will require the core set of financial statements comprising:

  • Historical balance sheets
  • Historical profit and loss statements
  • Cash flow statements
  • Revenue projections or forecasts

These statements illustrate the latest financial position, operating income streams, and ongoing ability to meet repayment obligations. High-growth startups may not have long financial histories but should present data from the incorporation date.

Supporting documents like bank statements, outstanding invoices, inventory listings, and fixed asset registers validate details shared in financial statements regarding liquidity and capital reserves.

Have an audit partner or financial controller certify your statements for added credibility.

Founders’ and Management Team Documents

Include professional profiles summarizing founders’ and key managers’ industry experiences, technical expertise, academic qualifications, and track records executing growth strategies.

Support with digital copies of certifications, academic transcripts, testimonials, and company incorporation certificates where relevant.

Other Supporting Business Documents

Provide key operating licenses, regulatory approvals, trademarks, patents, and intellectual property registration documents associated with your business setup. These validate legitimate ongoing concern status.

Having consultants or legal partners detail key business processes and compliance management frameworks in accompanying documents lends further credibility.

In summary, startup funding applications require tailored financial data supplemented by qualitative evidence of team abilities, product-market fit, and growth potential. Prepare documents demonstrating your capabilities in all aspects.

Helpful Tips to Improve Chances of Startup Loan Approval

As an early-stage company with a limited financial history, getting approved for a small business loan in Singapore can only be challenging with the right strategy.

Lender Selection

  • Research range of debt financing options matching startup profile rather than applying randomly
  • Prioritize government assistance programs before approaching private lenders.
  • Understand appeal criteria for different loan categories based on the business stage.

Application Preparation

  • Allocate sufficient time for thorough document collation, not just quick submissions.
  • Ensure every business aspect, from operations to projections, conveys confidence and commitment.
  • Summarize key commercial details in executive summaries for clear communication.

Ongoing Relationship Management

  • Maintain ongoing dialogue with prospective lenders beyond just financing requests.
  • Proactively seek mentorship from successful entrepreneurs aligned with your business.
  • Strategically plan future funding needs for subsequent growth milestones.

Therefore, developing tailored strategies and personalizing efforts for each financing source gives the best results. Persevere creatively to access startup funding in Singapore through programs explicitly designed to fill this niche.

Alternative Financing Options if Startup Loan Applications Rejected

Despite best efforts, there is still the possibility that conventional business loan providers reject early-stage companies, especially first-time applicants. Reasons may include limited operating history, low revenues, personal credit rating, or business plan or application document deficiencies.

However, don’t lose hope! Persist creatively with these alternative funding channels:

Government Grants and Assistance Programmes

Re-explore grants for your startup profile under Schemes like Productivity Solutions Grant or Market Readiness Assistance. Enterprise Singapore’s Startup SG Founder program also offers up to S$50,000 equity-free subsidy for first-time entrepreneurs to pilot innovations.


Crowdfunding platforms like Fundnel, FundedHere, and New Union help startups raise smaller sums from large distributed retail investor networks through digital channels. Beyond financing, successfully funded campaigns also validate product-market fit and business viability to help qualify for future funding rounds.

Angel Investor Networks

Active angel networks in Singapore, like AngelCentral, AngelVest, and TIEN, offer mentoring before opening access to high-net-worth individuals willing to invest in high-risk, high-reward startups. This provides both capital and expert guidance.

Unsecured Personal Financing

As a founder, evaluate if personal resources or loans through family offices can resolve immediate working capital needs for the startup. While a last resort before considering equity fundraising, these channels help traverse short-term cash flow issues.

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Frequently Asked Questions (FAQ)

1. What are the main types of startup business loans available in Singapore?

The main types are government assistance schemes like the Micro Loan Programme and Enterprise Financing Scheme, as well as term loans, trade financing loans, and equipment financing from banks and financial institutions.

2. What criteria do lenders evaluate when reviewing a startup loan application?

Lenders evaluate factors like business viability, profit/revenue projections, expertise of founders, assets provided for collateral, and personal or company credit history. A solid business plan is crucial.

3. What documentation is required when applying for a startup loan?

Required documents typically include a loan application form, business plan, financial statements and projections, founders' resumes/CVs, details of offered collateral assets, and other supporting information demonstrating the ability to repay.

4. How can startup founders improve their chances of getting a loan in Singapore?

Useful tips include building credit history early, preparing realistic forecasts, highlighting competitive advantages, demonstrating the relevant expertise of founders, offering collateral assets when possible, and developing relationships with banks before urgently requiring financing.

5. What alternatives are available if a startup loan application is rejected in Singapore?

Alternatives include government matching grants, crowdfunding campaigns, angel investors or venture capital, and personal loans from family/friends, focusing on getting revenue first before pursuing financing again.