Business Loans

How Do Unsecured Business Term Loans Work In Singapore?

Jennifer Tjahyadi
January 30, 2020

At some point of your journey towards building and expanding your business, you may need some form of business financing.

Perhaps you may have already known a couple of them, but let us introduce you to the most common one - the unsecured business term loan.

What is an Unsecured Term Loan?

An unsecured business term loan is a loan that is issued and supported by the borrower's/guarantor’s creditworthiness and some other factors. Borrowers do not need to pledge any form of collaterals to apply. For this reason, unsecured business term loans can be assessed and disbursed at short notice.

Unsecured business term loans are popular amongst SMEs due to their flexibility. They can be used to fund daily operational needs such as inventory purchases and payroll, or to finance business expansion plans such as leasing a new retail outlet.

However, since unsecured business term loans are not secured with any form of collaterals, the interest rates that entail are much higher as compared to secured loans (loans that require collaterals).

Features of Unsecured Business Term Loans

A typical unsecured business term loan funds up to $500,000 with a repayment period of 1 to 5 years.

The interest rate chargeable ranges from 7% to 12% per annum and administration fees are levied at 1% to 5% of the approved loan amount.

Unsecured business term loans usually have a Principal + Interest repayment pattern. However, for exceptional cases, these term loans may also have an Interest Servicing Only + Bullet Repayment repayment pattern.

The loan amount, tenor, charges and repayment schedule varies across different institutions. It is important to choose an unsecured business term loan that is affordable to you and at the same time, solves your business needs.

Business Loan Application Process

The following process is a rundown of how a typical business loan process works in Singapore and some of the things that you need to prepare at each stage.

1.     Apply online or at the branch  

  • You can apply through any bank or financial institution that has an online application platform or visit their premises.
  • Prepare MyInfo login for the online application and your NRIC.

2.     First call back from financial institution

  • The relationship manager (RM) will get in touch with you to know more about your company and business (e.g. number of directors, type of business).  
  • Be upfront with your company’s financial situation (e.g. the amount of existing loans outstanding) so that the RM will be able to understand fully and assist you in any way possible.

3.     Document submission

  • There are 5 main documents needed for business loan applications. You can refer to here.
  • Some financial institutions may request for other documents (e.g. upcoming contracts/receivables aging list) on a case-by-case basis.

 4.     Second call back from financial institution

  • A second call back may be given after document submissions for clarifications of documents and details are provided.

5.     Process for approval

  • The RM will submit your documents for approval.

6.     Presentation of business loan proposal

  • Once you have gotten approval, the RM in charge of your case will come up with proposals and solutions for your business needs and present them to you.

7.      Site visit

  • Depending on the type of business that you are engaging in, the RM may request for a site visit to your factory/company premises to better understand your operational systems.

8.     Sign documents

  • Before signing the loan agreement, take note of some important factors such as the loan amount, interest rate, type of rate (simple or effective interest), penalties and defaults.

9.     Disbursement of funds

  • The disbursement of funds is usually done in the form of FAST payments to your corporate bank account.


Before taking up an unsecured business term loan, take time to consider what the funds will be used for.

If your business needs extra funds quickly to bridge your working capital gap or take advantage of a good business opportunity, then an unsecured business term loan may be a good option for you.

Be mindful to use the right financial product for the right purpose. Doing so will put your funds to good use and scale your business in the long run.

Request for a Business Loan Now! operates a Business Loan Marketplace that allows an SME to connect to multiple lenders with just one application, allowing the SME to know who its prospective lenders are and the rates that they offer, in a very short time.

Leading digital loan marketplace Lendingpot connects SMEs to its network of 45 lenders comprising relationship managers from banks, financial institutions, and private and peer-to-peer lenders in Singapore. It aims to help SMEs overcome the information asymmetry problem and lack of transparency prevalent in the SME financing sector by offering SMEs financing options such as business term loans, property loans, revenue-based financing, credit lines, working capital loans, bridging loans, invoice financing, and more.

About the author

Jennifer loves helping SMEs in their business growth journey. She is also an epicurean and has perpetual wanderlust. During the weekend, she weaves poems out of thin air and buries herself in books.

unsecured loan
Unsecured Business Loans
Business Loan Application
Loan Application Process

You may also like

Business Loans
MLCB vs CBS: What are they?
Lina Tay
April 2, 2024
Business Loans
3 Singapore grants every business should tap on for hiring
Benjamin Lam
August 12, 2022