Si jie LIM
SME Micro Loan is cheaper than the other types of loans. All SMEs should explore this option prior to the other types of business term loans, working capital loans or using personal loans in their capacity. As part of the government’s plan to help SME with their cashflow, Enterprise Singapore launched the Local Enterprise Finance Scheme (LEFS). SME Micro Loan is one of the loan programs under LEFS.
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What Is SME Micro Loan?
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The SME Micro Loan is a government assisted financing scheme to help local SMEs access financing. Through the SME Micro Loan, companies can get access to working capital financing to support their day-to-day business operations.
Which Financial Institutions Are Participating In The SME Micro Loan Scheme?
In Singapore, there are 9 financial institutions that are participating in this SME Micro Loan scheme.
| DBS | IFS Capital | OCBC |
| Ethoz Capital | Maybank | RHB |
| Hong Leong Finance | Orix Leasing | UOB |
Table 1: SME Micro Loan Scheme Participating Financial Institutions
How Much Can You Borrow From The SME Micro Loan?
Under the SME Micro Loan, you can borrow up to a loan quantum of $100k. The repayment period for the SME Micro Loan can be stretched up to 4 years.
How Can You Qualify For SME Micro Loan?
In order to qualify for SME Micro Loan, your company needs to be registered and operating in Singapore. In addition, at least 30% of the shareholdings need to be owned by a local or PR. It does not have to be owned by a single local individual. For example, if there are 4 Singaporean shareholders with 7.5% shareholding each, your company will also qualify for SME Micro Loan.
Apart from ownership and registration criteria, your company also needs to have at most 10 employees. Alternatively, if your company’s annual sales turnover is less than $1M, you will also qualify for SME Micro Loan.
Most times, your company also need to be profitable in the latest year or 2 years out of three years. Cyclical downturns in some industries last much longer, this means that
How Long Do You Have To Wait For Your SME Micro Loan To Be Approved?
The typical wait time for an SME Micro Loan application is between 2 to 4 weeks. The long wait time is usually a result of back-and-forth emails requesting for documents and information gathering by the bank. However, if you were to engage a loan consultant, you can reduce the wait time to as short as one week.
Is SME Micro Loan A Guaranteed Approval Loan?
Unfortunately, SME Micro Loan is not a guaranteed approval loan. This means that there is still a chance that your application will get rejected. In the event that your application gets rejected, you will not be able to submit another application within the next 3-6 months.
What Is The Interest Rate Payable On SME Micro Loan?
Officially, the interest rate for SME Micro Loan program is subjected to the participating financial institutions’ risk assessment process. You can realistically expect the interest rate on your SME Micro Loan to be between 6-8.75% per annum (effective interest rate). This means that each bank might offer SME Micro Loan with different interest rate.
In order to get the best interest rate on your SME Micro Loan, you need to send in an application to every financial institution and view their offer. However, most SMEs cannot afford the luxury of time to do that.
This is where iCompareLoan’s team can come in to help you compare all the financial institutions’ to help you get the best deal. Get in contact with us if you are keen to get an SME Micro Loan to expand your business.
