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SME micro loans

Get quick access to some much-needed cash with a micro loan.

If your small company is looking to access funding to pay for any type of business finance needs, you may want to think about a SME micro loan. This type of funding – available from banks, credit unions and standalone finance lenders – can give you fast access to much-needed cash.

Read on to find out more about how SME micro loans work, including how to compare your options to help you find the right deal for your business.

What is a micro loan?

A micro loan is a small, short-term loan that can be used to meet the financial needs of your business. One of the benefits of a micro loan is that it may be faster to secure funds, when compared to a standard business loan. You may qualify for one even without a business credit score, as this type of loan often helps new companies who are fairly early in their business journeys. Once you’ve secured funding, you’ll need to repay the loan over an agreed period of time, plus interest.

How to compare small personal loan options

  • Type of loan. It’s more common for micro loans to be unsecured, but do check before you apply. An unsecured loan is a type of lending that doesn’t require a personal or business asset as collateral. While unsecured loans do not require you to offer security, they do tend to attract higher interest rates and fees as a result.
  • Interest rate. Micro loans are available with fixed or variable interest rates. A fixed interest rate offers the security of knowing exactly what your repayments will be well into the future, allowing you to plan your budget accordingly. A variable interest rate will fluctuate in line with the market, which could end up either costing you more or less over the life of your loan.
  • Loan amount. The amount of cash you can get with a micro loan will vary from lender to lender, so look for a loan that is suitable for borrowing the amount you would like.
  • Loan tenure. Typical limits for the term of your loan range from one to five years.
  • Processing time. Some lenders on the market will allow eligible applicants to receive funds within 24 hours. Shop around for a micro loan which offers a turnaround time of no more than two weeks.
  • Fees and charges. Just like with any other loan, keep an eye out for any hidden fees and charges that will end up increasing the amount you will have to pay. As an example, some personal loans charge an establishment fee, which can be quite a large amount if you’re only borrowing a small sum.
  • Repayment flexibility. Look for a loan that offers flexible repayment options, allowing you to tailor a repayment schedule to suit your budget. Also check whether you can make extra repayments and pay off your loan early without attracting any penalty.

Is there anything I should watch out for?

  • Fees and charges. Just as with any other type of loan, keep an eye out for hidden fees and charges. Even if they seem small, they can add up to a substantial amount of money over the term of your loan.
  • Too much debt. Borrowers need to be careful not to get in over their heads and build up a mountain of debt they have no chance of repaying. Make sensible financial decisions to prevent any problems.
  • Untrustworthy lenders. The small loans market can tend to attract some dodgy lending companies from time to time. Make sure to do your research on a lender before you take out a loan, as getting into business with an unscrupulous lender could end up costing you a lot.

How to apply for a micro loan

Once you’ve found a micro loan that meets your requirements, click “Go to Site” to follow a link through to the lender’s website. Eligibility requirements may vary from one lender to the next, but typically you’ll need to be:

  • A registered business which operates in Singapore, usually with at least a 30% local shareholding
  • At least 6 months old and actively operating
  • Ideally, your business should be able to prove it has a history of managing credit responsibly
  • An annual sales figure limit may apply (often around S$1 million per annum); along with a cap on the number of employees

You’ll also have to provide your business’ name and contact details, proof of business plans and profitability, and details of your assets and liabilities when applying. Make sure that you have all the necessary paperwork ready to go before you start your application.

Most lenders offer fast approval to ensure you have quick access to your funds.

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