If you are a business owner, chances are you would have heard of OCBC’s Business First Loan.
In terms of entry points, it is one of the more accessible loans for newly set-up SMEs.
Read on for our detailed review of the loan.
• Businesses registered and operating in Singapore;
• Companies that are between six months to 2 years old;
• 30% shareholding owned by Singaporeans or permanent residents;
• No more than 10 employees; and
• Annual turnover not exceeding S$1 million.
Other terms and conditions apply.
• You get to enjoy “attractive interest rates”, and hence, lower costs.
• You can repay the loan over 4 years.
• You can apply here using MyInfo (Singpass) without needing any paperwork.
• You will get informed of your loan status in “minutes” if you apply online.
• The facility fee is set at 2% of the loan quantum. A facility fee is what a borrower pays to a lender in exchange for a loan.
• You need at least one guarantor to support your loan.
• He or she must be a Singaporean or Singapore permanent resident, between 21 and 62 years of age.
• The guarantor also needs to earn at least S$30,000 per annum.
The barriers to entry in the lending ecosystem are high, and for good reason. Banks do not look at how much promise your young set-up holds; they only want to know how it’s been performing so far.
In this respect, kudos to the OCBC Business First Loan for lowering some of the entry points for new SMEs. Most banks require companies to be at least two years old before they are eligible for a loan.
The very fact that you don’t have to wait two years before you apply for a loan must be nothing short of a relief to new SME owners. After all, there is a big difference between six months and two years!
However, the terms and conditions state that “All loan applications are subject to approval by the Bank at its sole discretion” – which is understandable, especially in the light of today’s business climate.
Also, this being an unsecured loan that does not require collaterals, the bank would require an alternative form of security – which is, the guarantor.
This serves to safeguard the bank’s interests, as the SME owner might have little or no records to show in terms of his company’s financial performance.
This would explain why the guarantor (at least one) needs to be earning at least S$30,000 per annum. You may stand a higher chance of getting the loan if you have more than one guarantor who earns more than S$30,000 per annum.
Even better if the guarantor has a good personal credit record, as it would make for a stronger case.
Again, the decisions of whether or not to grant you the loan and how much the loan quantum will be are solely at the bank’s discretion.
Lastly, assuming your loan application is approved, you have up to 4 years to pay off the loan, which sounds quite doable.
All opinions expressed in this review are made for the purpose of providing general financial information only. Please consult your financial advisor or relationship manager before making a decision on any loan.
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Belinda loves thinking about random stuff, and collecting useless bits of facts and trivia. She often roots for the underdog, and believes the world needs more happy endings.