POSB “People’s own Savings Bank” is the oldest bank operating in Singapore. POSB works under the Deposit Protection Scheme. Small business owners need funds to finance their business and there could be many options for them i-e term loans, Small Business Administration loans, and Equipment loan. But which loan product is suitable for your business? It depends upon many factors like the nature of your business, term & conditions, and the annual percentage rates. POSB is one of the best options for business loans. Let’s take a look at common business loans.
Term Loan is a very common type of business loan for small business owners and entrepreneurs. It may require a personal guarantee or collateral. But it borrows you higher amount and fast funding. You can borrow up to S$ 50,000 to S$ 400,000. Annual percentage rate is 10% to 25% (may vary). To qualify for this loan your business should be operating for at least 2 years. It provides short term financing.
SBA Loan, POSB gives an amazing small business administration loan package. The repayment period depends on how you use this money. Its tenure period may vary from 7 to 25 years. You can buy equipment, purchase real estate, and use it for working capital. You can borrow S$ 5 million. Interest rate is 8.53% p.a. It is hard to qualify and has long repayment terms.
Equipment Loan helps you buy equipment for your business. You can get this loan easily if you have strong credit and business finances. Interest rates depend upon the value of equipment and strength of your business. You can borrow up to S$ 10,000 to S$ 350,000. The annual percentage rate is 6%-24%. You should be in business for at least 18 months.
Among those business loans, POSB offers you some other types of loans to fund your large business.
SME business loans are ideal for all kinds of SMEs. The loanable amount depends on the size of SME’s asset values and the ability to repay. This loan includes working capital, order financing, bank guarantees, bridging loan facility, and asset financing. This loan can be issued to an individual or group of SMEs who can guarantee each other to reduce default risk.
It is a card-based account. Through this account, SME easily deposits and withdraw cash. This SME account is ideal and mandatory for SMEs. Without this account, SME can’t access loan packages.
SME needs to meet the following criteria.
- SME must have an operating account in POSB.
- A brief business profile of the business is required including; project management structure, marketing arrangements, and current operations of the business.
- Financial records of the business for the past 2 years or 6 months depending upon the age of business.
- Company’s registration documents.
- Identity and proof of residence of directors.
- Company’s valid tax clearance certificate.
- The trading license of the company is required.
- Company’s current bank arrangements with other banks.
SME business loan requests are approved in 48 hours. An SME borrows S$499,999 loan amount. He has to give back this amount in 5 years. Interest rate is very low, 4%. Monthly repayments are easy, RM 3882.17 per month.
The agribusiness loan is ideal for all agribusiness. The loan amount depends upon the size of the business, asset value and ability to repay. This loan includes order financing, bridging loan facility, asset funding, and working capital. This loan can be issued to an agribusiness or group of agribusinesses who guarantee each other.
The agribusiness account is dedicated to Agribusiness. This account is mandatory for small agribusiness SMEs to get loan packages. But for large agribusiness, SME has a corporate account. To open the agribusiness account, you must have proof of residency (utility bills or letter from employer, etc.) and original ID card.
To get agribusiness loan you need to meet the following requirements.
- Agribusiness account in POSB.
- Official tenure letter of the land.
- A brief history of business and current operations.
- Identify documents or proof of residence of an individual/all director.
- Insurance policies of crop/Livestock, farm equipment /machinery, etc.
- Current banking operations with other banks.
- Tobacco growers must submit a grower’s number.
- Cash budget from the crops.
- The production schedule of the crops.
You can get a loan up to S$50,000 – S$ 2 million (for very large Agribusiness). The monthly repayment amount is not fixed it depends upon the production of crops. You have no restriction of depositing or withdrawing cash and you have access to ATM card and internet banking. Usually, the tenure period is 7 years. Interest rate is 9.8% p.a.
Corporate and Overdrafts Loans:
Corporate loans allow corporates to manage their capital’s expenditures. Overdraft loans allow the company to draw money from their account even if it has no money. In other words, the overdraft loan helps companies to fill their temporary financing gaps.
To apply for a corporate loan, it is mandatory for the corporation to have a “Corporate Account” with POSB. The minimum amount of S$500 should be deposit in a bank account. This account should be operating for like 3 months.
- To qualify for Corporate and Overdraft loans you must meet the following requirement.
- A company profile, Business plan, and project proposal is required.
- The company’s income statement, balance sheet, and 12 months of cash flow is required.
- Registration document of CR14, articles of association, and certificate of incorporation are required.
- The company must have proof of business premises.
- The national ID card and proof of residence of directors are required.
A corporate can borrow a loan amount of S$50,000 to S$ 450,000. The tenure period is usually 4 years. The interest rate is 7.5% p.a. processing fees are 2%. Your request can get processed id 3-4 working days. Monthly repayments are not fixed usually it depends on the loan amount.