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Unsecured Business Loans in Singapore

Find flexible business loans in Singapore that don't require asset collateral.

Competitive unsecured business loans in Singapore can help you reduce costs, maximise benefits and minimise risks to your business. This guide will cover how unsecured business loans work, and how to find the best one for your business.

What is an unsecured business loan?

An unsecured business loan is a form of business finance that does not require asset security, such as commercial or personal property, as collateral.

How do unsecured business loans work in Singapore?

The eligibility for unsecured business loans depends on your business’s monthly sales and cash flow, which represents your ability to pay back the loan.

While it used to be the case that businesses needed security to be eligible for a business loan, this is no longer a hard-and-fast rule. Secured business loans are loans in which businesses use their property to guarantee the loan. Using an asset as guarantee means that if the business defaults on repayments, the lender can repossess the property to cover the costs of the loan.

Why don’t I need security?

As Singapore’s local fintech market blooms, we’ve seen plenty of lenders filling a gap in the business loans market. This gap had been created by banks as fewer business owners were able to offer security and were, therefore, unable to access business funding. In response to this, banks have now started to offer their own unsecured business loan products, with some targeted at SMEs.

Are unsecured business loan rates competitive in Singapore?

There are currently more options than ever when it comes to unsecured business loans in Singapore. With more and more lenders entering the market, competition is fierce. These modern lenders, who tend to be based online, have less overhead and are thus able to offer potentially lower rates than the bigger banks.

However, secured business loans still tend to have lower rates than their unsecured counterparts because they pose less risk to the lender.

How much can I borrow?

Unsecured business loan amounts often range from S$5,000 to S$500,000. Some providers even offer up to S$2 million for unsecured loans. The amount you’re eligible for depends on your monthly turnover. For example, if your business generating over S$50,000 per month with consistent growth, lenders are more inclined to provide higher loan amounts.

Compare some of the unsecured business loans in Singapore

At the time of writing, in March 2020, these were a selection of some of the unsecured business loans on the market:

  • DBS SME Business Term Loan: A convenient loan that can be applied for via Singpass’s MyInfo.
  • OCBC Business Term Loan: A collateral-free loan that provides immediate funds for your business. The loan application process takes less than 5 minutes when you connect to MyInfo (SingPass) or MyInfo Business (CorpPass). The loan amount approval can be granted within 1 business day.
  • UOB Business Loan: A bundled loans facility which combines Enterprise Singapore (“ESG”)’s SME Working Capital Loan with UOB’s BizMoney.
  • CitiBusiness Unsecured Business Loan: A fast and flexible Unsecured Business Loan (UBL) that can be tailored to meet your company’s specific needs.

Pros and cons of unsecured business loans in Singapore

Here’s a list of potential benefits and drawbacks to getting an unsecured business loan.

Pros:

  • Less risk to the borrower. There is less immediate risk posed to your business because if you default on the loan, you won’t lose your personal or company property.
  • Increased flexibility. An unsecured business loan may come with fewer limitations, such as how the loan is used.
  • Quicker turnaround time. Because unsecured loans usually require less documentation, you could get the funds for your business in as little as a few hours with some lenders.

Cons:

  • Higher rates and fees. Unsecured business loans pose more risk to the lender so they tend to cost more.
  • Less financing available.Depending on the turnover of your business, you may find it difficult to borrow larger sums of money without asset security.
  • Bad credit applicants may struggle. If you have bad credit, you might find it harder to qualify for an unsecured business loan. However, some forms of unsecured business finance such as invoice finance do accept applicants without a stellar credit history.

Is my business eligible for an unsecured loan in Singapore?

Eligibility criteria differ between lenders but you will usually need to meet the following criteria:

  • Business turnover. Lenders may have a minimum turnover requirement.
  • Time in operation. You may be required to show that you’ve been operating for a certain amount of time. This is usually 6 months to 1 year.
  • Director’s credit history. Business credit files and the personal credit files of directors are typically subjected to checks.
  • Business premises. You may be required to have been leasing the same location for a certain period of time.
  • Business structure. The requirement is usually that your business is registered in Singapore, but lenders may only lend to sole traders, partnerships or other such business structures.

Can I get an unsecured business loan to start a business?

Many lenders tend to have stronger preferences for businesses that have been around for over 6 months. People looking to start a new business can access startup loans instead, gaining access to funding without the need to offer security.

How to compare unsecured business loans in Singapore

Unsecured business loans come with a range of features that you can look at to compare your options. Make sure you check the following:

  • Loan amount
    Lenders have set minimum and maximum amounts that they will lend, so make sure the amount you need is on offer from the lender.
  • Turnaround time
    Many lenders can now get your approved funds to you within 24 hours, but other lenders may take longer. If you need your funds by a certain time, make sure the lender is able to accommodate this.
  • Interest rate
    Comparing interest rates is a good way to determine how competitive a loan is. However, remember that fees may also apply, so check this when you’re comparing. The best way to get a more accurate representation of the interest rate is by checking the comparison rates on our website, as these take into account additional fees.
  • Repayment period
    How long is the loan term? The length of the term will affect how high your repayments are. Most lenders have a business loan calculator on their website for you to have an idea of what your repayments are likely to be and how long you can take to repay the loan.
  • Fees
    Up-front and ongoing fees such as application fees and monthly fees may apply to your business loan. You may also need to pay a loan establishment fee or direct debit fee. Comparing the level of fees you need to pay can help you determine its competitiveness.

Is there anything to keep in mind before I apply?

Start by comparing your unsecured business loan options on this page using the comparison table, then prepare your relevant documents for the application process. You’ll generally need the following to apply:

  • Personal identification such as NRIC or passport
  • At least 6 months corporate bank statements
  • Latest 2 years financial report (audited, if possible)
  • Director’s Income Tax Notice of Assessment
  • Director’s credit history
  • Company’s paid-up capital
  • List of existing banking facilities
  • Business profile from BizFile
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