Regardless of whatever stage your business is currently in, taking up a business loan – if managed well – would undoubtedly be financially beneficial for your business in terms of starting, maintaining, or even scaling it.

While it would help to first understand how you can Get a Business Loan in Singapore, this article skips the nitty-gritty details on describing the different types of business loans and their application processes, diving straight into the guide for beginners to gain a comprehensive understanding of the respective interest rates and their calculations for Business Loans in Singapore.

Generally, apart from alternative financing options such as crowdfunding and venture debt financing etc., business loans in Singapore are traditionally provided by banks in varying forms such as unsecured business term loans, trade financing, SME working capital loans, equipment and machinery loans, and commercial property loans to name a few. The Temporary Bridging Loan Programme (TBLP) and SME Working Capital Loan (EFS WCL) were also recently introduced by the Singapore Government in 2020 to support SMEs and help the enterprises access working capital and increase both the loan quantum and risk-share undertaken. 

These business loans would be accompanied with their respective interest rates charged, and they vary from time to time across the financial institutions. Another important point to take note of is that interest rates are also dependant on whether if there are any collateral – tangible assets like property and equipment – pledged towards the banks; whereby unsecured loans (without collateral) would typically incur higher interest charges. Similarly, for government-assisted loans like the TBLP and EFS WCL, the interest rates are generally lower due to the risk share undertook by Enterprise Singapore (ESG). These interest rates are normally quoted in the form of an Effective Interest Rate (EIR).