The SME Micro Loanis a financial scheme supported by the Singaporean Government to help local SMEs access financing. When the SME Micro Loan is approved, Singaporean firms are eligible to be able to receive working capital financing as an aid for their daily operation consumption cost.
How does the SME Micro Loan contribute to SME in Singapore?
SME Micro Loan provides financial relief for Singaporean companies as compared to other loans provided by banks. Currently, these microloans have become the preferred choice of loans over other types of loans such as business terms, working capital or personal loans. Singaporean SMEs should consider these SME Micro Loans before considering or taking up other loans. The reason is due to the government’s aid of providing financial relief toward SMEs. The government initiatives aim to help SME in its cash flow by launching the Local Enterprise Finance Scheme (LEFS). Hence, the SME Micro Loan belongs to one of the categories under the LEFS.
At the moment, nine financial institutions provide the SME Micro Loan Scheme. There are DBS Bank, IFS Capital, OCBC, Ethoz Capital, Maybank, RHB, Hong Leong Finance, Orix Leasing, and UOB. The amount that an SME can loan is $100K with a repayment period that spans up to 4 years. However, there are certain criteria for an SME to take the SME Micro Loan.
Are You Eligible for SME Micro Loan?
For eligibility for the SME Micro Loan, a firm is required to have its operation registered and based in Singapore. 30% of the shareholders within the company should be local citizens or Permanent Residents (PR) as a requirement of eligibility. 30% of shares are not required to need to be held by a single person. Multiple Singaporean citizens or PRs can own the shares, as long as the percentages of the shares add up to 30%, the requirement is met. After meeting the requirements of local registration, operation base, and ownership, another criterion is the number of people in an SME. It is important to note that having 10 people is the maximum amount of employees an SME needs to have to qualify. The company’s annual sales turnover should be below $1M to qualify for the SME Micro Loan. Finally, the company should be profitable in the latest year or at least 2 out of the 3 years of business operation.
To sum up, what we have listed, the criteria are as follows:
- Registered & Operations Based In Singapore
- 30% Local or PR Shareholders
- Maximum of 10 Employees
- Less Than $1M in Annual Sale Turnover
- Profitable in Latest Year or 2 Out of 3 Years
Generally, the waiting period of approval for the SME Micro Loan takes about 2-4 weeks. During this period, emails and documentation would be requested as well as disseminated by the relevant banks to ensure all the information is justified and correct. One of the frequently asked questions is how to reduce the waiting period? We recommend using a loan consultant as they can provide services of convenience and reduce the waiting time by half.
Taking A Micro Loan From A Licensed Moneylender
If your business is not eligible for the loan scheme by the Singapore government, you may consider getting a SME Micro Loan from a Singapore licensed moneylender.