Compare More Business Loans: StanChart vs Maybank vs Citi (2018)
Looking for more business
Most, if not all SMEs in Singapore own at least one operating bank account with the 3 local banks. It is not surprising that business owners often apply for their first business loan with them.
In this case, foreign banks may be a good alternative source of financing. Although their eligibility criteria are not any less lenient compared to the local banks, they may be more eager to fund good companies from industries that may be less-favoured by the local banks (e.g. marine & offshore, construction, retail)
Let’s look at a comparison of the basic business loan (NOT the government assisted scheme).
|Lendingpot's Business Loan Comparison|
|Standard Chartered Bank||Maybank||Citibank|
|Product Name||SC Business Installment Loan||Maybank Business Term Loan||CitiBusiness Unsecured Business Loan|
|Max. Loan Amount||S$70,000 - S$300,000||Up to S$500,000||S$250,000 - S$350,000|
|Loan Tenor||1 - 5 Years||Up to 5 Years||Up to 4 years|
|Pricing||10 - 15% p.a. (EIR)||7% - 12.88% p.a. (EIR) (usually 8.75% onwards)||6.25 - 13.0% p.a. (EIR) (usually 9.88 - 10.88%)|
|Annual Fee||1st Year: 2% of approved loan amount (min. S$400) 2nd Year: S$100||N.A.||N.A.|
|Lock-in period||3 Years||Not specified (prepayment fee will apply throughout the loan tenor)||Not specified (prepayment fee will apply throughout the loan tenor)|
|Prepayment Fee (within lock-in)||3% of loan amount prepaid||2% of loan amount prepaid||3% of loan amount prepaid|
|Full Redemption Fee||If within 12 months, 5.0% of the outstanding loan amount If after 12 months, 3.0% of outstanding loan amount||Prepayment fee will apply||Prepayment fee will apply|
|Cancellation Fee||Full redemption fee will apply||2.0% of approved loan amount||Not information|
|Processing Fee||2% of the approved loan amount (1% if eligible)||2.0% of the approved loan amount||2% of the approved loan amount|
|Min. Business Turnover||S$500,000 - S$750,000 (must fulfil credit risk grading if under S$750,000)||S$300,000||S$500,000 - S$750,000 (must fulfil credit risk grading if under S$750,000)|
|Min. Years in Business||3 years (5 years if construction)||2 years||3 years|
|Secured by Guarantors||Yes||Yes||Yes|
|Sources||Link. Link.||Link. Link.||Link.|
|Disclaimer||*All the information is believed to be accurate; however, no claims, promises or guarantees about the accuracy, completeness or adequacy of the information are made. All information, commentary, recommendations or statements of opinion provided in this article are for general information purposes only. We do not claim to be authoritative.|
Compared to the local banks, foreign banks are more open to negotiation. Although their stated minimum business turnover is higher, they may be happy to make exceptions for good businesses that pass their credit risk grading.
Note that for many foreign banks, one of their key justification for a business loan is how likely you are to make your monthly repayment and pay back the loan.
What would improve your company’s credit risk grading?
From anecdotal accounts, the first key is having good cash flow. From the bank’s perspective, repayment of the loan is more certain with good cash flow and healthy margin (i.e. more deposits than withdrawals).
Directors are often directly responsible for the success of their companies and thus, years of prior management experience (more than 3 years) in the same industry would also enhance a companies’ credit risk grading.
Lastly, good financial records (directors’ NOA & CBS, company’s profit and loss statement) will go a long way to convince them that your company is bankable.
Additional tips for small business owners getting a business loan with foreign banks.
a. Highlight your repayment capabilities to the bank.
i. Your source of repayment can be your income from a second business. It doesn’t have to be from
the business you are applying the loan for.
ii. Cash-based businesses should start banking in their daily takings as soon as possible. This will
register their company’s true cash flow and thus their true repayment capability.
iii. High regular cash flow = greater loan repayment ability.
b. Are you a private wealth management client with the foreign bank?
i. Surprisingly, you can leverage other personal criteria that might help to address some of your
ii. The company’s revenue doesn’t hit S$750,000? It will help if you are a private wealth client with
that foreign bank.
iii. Your company have not been in operations for more than 3 years? It will help if you can prove that
you were previously managing a company in the same industry and with a combined experience of
more than 3 years.
c. Get a business loan from a marketplace like Lendingpot.sg (forgive our shameless advertising again)
i. You get connected to multiple relationship managers at the same time who knows they are
competing with other banks.
ii. In order to win your business, relationship managers are more likely to either compete on price
(e.g. offer cheaper interest rates) or improve their service level to win your business.
iii. It’s free. No gimmicks. Read why here.
Good luck in your business loan hunt!
About The Author
Eric Koh is passionate about helping SMEs grow and has spent years interacting with business owners at OCBC and IFS Capital. He is interested in 70s Rock n Roll, the odd novel and copious amounts of historical trivia.
Connect with him via firstname.lastname@example.org