Foreign owned enterprises form a significant part of the Singaporean economy. In 2022, foreign affiliates, defined as enterprises with more than 50% equity owned by a single foreign investor, contributed up to $433.3 billion in nominal value added, and over 75% of total trade to Singapore’s economy.
But like any other enterprise, foreign-owned companies are not exempt from the hurdles that affect other businesses, whether it’s cash-flow or unexpected expenses or expansion costs.
If you are a stakeholder in a foreign-owned business entity, you may be wondering what your options for financing in Singapore are. Let us explore the answer to this question in an informative manner.
The short answer is yes, provided that your company has at least 30% local ownership by either a Singaporean citizen or permanent resident. If your company fulfils this requirement, it is much easier to get business financing from traditional lenders like banks.
Most mainstream banks in Singapore are limited to whom they may extend a business loan. Banks such as Maybank, DBS, UOB, and more usually extend their business loans to corporations with at least 30% shares held by a local. If your company fits this condition, you will be allowed to proceed with your application.
Your company will also have to fulfil a few other requirements, such as needing to be incorporated in Singapore for at least one to two years. If you’re applying for an SME loan, your company would have to generate less than $100 million per annum or employ less than 200 individuals.
The approval of your application will depend on several factors, such as your company’s credit score, complete submission of documents and stability of revenue.
While traditional lending establishments like banks may be limited in who they extend business loans to, there are alternative lenders with more flexibility. They are able to extend business loans to companies with less than 30% local shareholders, and they can take on different forms. Here are some of the business financing firms that extend loans to foreign owned businesses.
These establishments are businesses that provide loans to other businesses. Their funds come from their balance sheet, with revenue generated from interests, fees and penalties charged to borrowers. B2B money lenders in Singapore are regulated by the Ministry of Law, and are subject to strict regulations on the amount of loans they can lend, interest as well as the fees and penalties they may charge. Moneylenders may offer several types of business loans, including term loans, invoice financing, start-up financing and the like. Examples of licensed money lenders are included on our personal loan platform: https://personal.lendingpot.sg
Fintech provide business loans as an entity, and look at alternative data points as compared to traditional lenders. These companies mainly focus on hard data points like your revenue information extracted from your POS systems, bank statements rather than depending on the guarantor as the way out. Companies would include Choco-up or Jenfi both of which are available on our lending platform.
The loan products offered by both banks, and alternative lenders vary from one entity to the next. One of the most common types of loan is a term loan, which is simply financing that you receive in bulk upon approval, and will then have to repay on a monthly basis.
Another type of loan is a line of credit. This works similarly to a credit card, where you withdraw funds up to a certain limit. You will have to repay that amount in the months following. You are free to withdraw multiple times but only up to your maximum limit.
Lenders in Singapore also offer start-up loans, bridging loans, invoice financing, purchase order financing , working capital loans and more.
At Lendingpot, we aim to help SME business owners overcome information asymmetry and offer increased financing transparency, saving you time and effort as you conduct your research.
With just one sign up, you will be able to list your financing request and view the various loan offers available from more than 45 lending partners. They include banks, P2P lenders, private lenders and others. As an account holder, you will be able to review loan offers with full transparency, ensuring that you make the best informed decision for your business. Reach out to us to learn more about how we can help your business achieve its financial goals.
Lina heads up all things marketing and branding at Lendingpot. With a keen aesthetic eye, she believes in the use of design to communicate with our SME community and aspires to turn Lendingpot into a household name. Out of work, she is an avid camper and appreciator of nature’s best works.
