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START UP LOAN

Fund your dream today with a start-up loan

With the lack of track record, SMEs struggle to get the funding to kickstart their business. Here are 3 types of start-up loans that you can consider.

The Classic Personal Loan
Up to 8x your monthly income,
5 years, ~8% p.a.
The Share-backed Loan
Borrow up to 70% of the value of
your publicly held shares. As low
as 3% p.a, 2 years
The Insurance-backed Loan
Borrow against the surrender value
of your insurance policies. As low as
3% p.a., 2 years

Explore Start Up Loan options from our leading lenders

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Why are Personal Loans the best way to fund a start up?

One of the biggest struggle that new companies face is the lack of track record or even an existing operation. Thus, it becomes almost impossible to obtain a traditional business loan. Even if a loan is obtained, it is likely that you might be faced with a high interest loan (possibly 3-4% per month). As such, when you actually do the math, a personal loan might actually be a way better option. Here’s a few reason why.
Enjoy lower rates
As new companies are often subject to high interest rates from alternative lenders (3-4% per month. Personal loans rely on your annual income and can go as low as 5-6% p.a. If you have collaterals, they can even be as low as 2-3% p.a.
Enjoy a higher quantum
Business loans are disbursed at a proportion of your revenue which is negligible for a start-up or pre-revenue company. However personal loans are provided at a multiple of your monthly income. This can stretch up to 8x for some banks which can be a good boost for your business.
Reduced Administration
Reduce the need for administration with a business loan which entails, monthly reporting, provision of financials and bank statements etc. With a personal loan all information required are often already captured through MyInfo with no documentation required.

The Classic Personal Loan

A personal loan is properly defined as a loan that is disbursed into a borrower’s personal bank account. This is not to be mistaken with other loans typically associated with it such as an auto loan or a renovation loan. The two mentioned are loans that are paid directly to the car dealer and contractor and not into the personal bank account. As such, auto loans and renovation loans are not appropriate for business use as there is no flexibility in its usage.

Here’s a classic path to your personal loan





It all starts with your income
Depending on your annual income, you may be entitled to a loan quantum that is a multiple of your monthly income. See table below.
Maximum Loan quantum
Annual Income
Less than S$20,000
S$20,000 - S$30,000
More than S$30,000
More than $40,000
More than $120,000
Banks
-
-
x2
x4
x8
Licensed Money Lender
Max S$3,000
x6
As you can see, banks in Singapore only serve the segment earning more than $30,000 a year and can lend up to 8 times your monthly income. Thus, anyone earning less than S$30,000 can only borrow from a licensed money lender.

Individuals earning S$20,000 to S$30,000 are best served as they can borrow up to 6x of their monthly income. For individuals with no declared income, or income lesser than $20,000, the maximum loan they can obtain is S$3,000.
Second, your Credit Bureau Score
The second most important thing that many lenders see is your Credit Bureau Report. Here’s a quick guide to understand your credit bureau report.


While there are many things to look at the report, the 3 things that can determine your eligibility are:

1. Overall Grade
2. Presence of default or bankruptcy
3. Absence of score
Factors
Overall Grade
Presence of default or bankruptcy
Absence of score
Banks
Min DD and above
Not eligible
Typically not eligible
Licensed Money Lender
No restrictions
Not eligible
No restrictions
How to check your credit score in Singapore?
To check your credit score, you’ll have to generate a credit report from the Credit Bureau Singapore (CBS). You can either
1
Request for a softcopy online or
2
Request for a hardcopy at SingPost outlets, the CBS office or CrimsonLogic Service Bureaus
Price
S$6.42 (incl. GST) + S$2.00 for multiple delivery modes.
You may collect your report within 2 hours at any SingPost outlet for an additional administrative fee of S$17.12.
Third, interest rates
As you can see, banks present a significantly cheaper option with rates ranging from 6-8% p.a. (EIR). Licensed money lenders on the other hand charge monthly interest rates and can go up to 4% per month. This is a upper cap regulated by Monetary Authority of Singapore (MAS).
Banks
6 - 8% p.a. (EIR)
1.5% processing fee
Licensed Money Lender
1 - 4% per month
2.5 - 7% processing fee
Understanding Interest Rates
When comparing personal loans in Singapore, you may have realized that each loan has at least two different interest rates.
Effective Interest Rate (EIR)
The effective interest rate, or EIR, must be stated alongside the advertised rate in Singapore. This includes processing and other costs, as well as the specifics of your repayment plan. In a nutshell, EIR displays the personal loan's "actual" interest rate as it takes into account the compounding of the interest as you make your repayment.
Annual Percentage Rate (APR)
The yearly interest earned by an amount charged to borrowers or paid to investors is referred to as the annual percentage rate (APR). APR is a percentage that indicates the real annual cost of money for a loan or investment over the period of the loan. This includes any fees or other expenditures incurred throughout the transaction, but does not include compounding.
Lastly, figure the tenor.
One of the great benefits of banks is that they can lend for an extended tenor up to 5 years which significantly reduces your monthly instalments. As for money lenders, because interest rates are almost 3-4x, it seldom makes sense for a loan to go past 2 years.
Banks
Up to 5 years
Licensed Money Lender
Up to 24 months
In summary,

The choice between banks and licensed money lenders is not entirely obvious for personal loans as there is a gap that money lenders are able to fill that traditional banks cannot. While banks are the preferred choice in most scenarios, here’s 3 scenarios you want to go with a money lender.
Your income is less than $20,000
Licensed Money Lenders can provide loans up to $3,000
You do not have a good CBS record
As long as you are not in default, licensed money lenders are still open to providing credit
You need a larger quantum but earn less than $40,000
While most banks can only extend up to 2 times, Licensed money lenders can lend up to 6 times your monthly income

The Share-backed & Insurance-backed Loan

While many people turn to property cash-out as a means to fund their dream business, many neglect other available options such as using the value in their publicly held shares or even value in their insurance policies. Here’s a quick introduction of both such products which are offered through Lendingpot.
Share-backed Financing
3.6% p.a.
Interest Rate
Max 2 years
Tenor
0.5%
Processing Fee
Monthly Principal + Interest
Repayment Schedule
What is it?
A way to obtain liquidity from your investment by taking a loan against its value. You will need to custodise the security, making it not tradable during the loan period.
Type of applicable assets
Shares, unit trusts, bonds and money market funds (an open-ended mutual fund that specializes in short-term debt securities).
Loan-to-value (LTV) ratio
Depending on the security type, up to 70% of the assets' market value. The more stable the stock the higher the LTV. For example, if the market value of Share A is $1,000, financing of up to $700 may be offered.
Note: Should the LTV at any point exceed 90%, a top up may be required by the lender
Eligibility
Singaporean and foreigner allowed. Min annual income $100,000 or have $250,000 of transferrable assets. Min age 21.
Benefits
1. Solve short-term cashflow needs while participating in your investment upside (dividends and capital appreciation).
2. Get emergency liquidity on standby for your business needs through an additional cashline.
3. No impact on your long-term wealth planning and financial goals.
Quantum
Min $50,000, or max of up to 2x of your annual income or 2x assets with the loan provider.
Insurance-backed Financing
3.6% p.a.
Interest Rate
Max 2 years
Tenor
0.5%
Processing Fee
Monthly Principal + Interest
Repayment Schedule
What is it?
A way to unlock the existing value in your in-force insurance policy without giving up the protection and perks that the policy offers.
Type of applicable assets
This is only applicable to fully paid insurance policies with a surrender value, and which were issued by reputable insurance companies.
Loan-to-value (LTV) ratio
Up to 90% of the latest guaranteed surrender value. However, the final financing amount will depend on the insurance policy’s latest guaranteed surrender value, while the LTV ratio will depend on the type of policy, and the company that issued the policy.
Eligibility
Singaporean and foreigner allowed. Min annual income $100,000 or have $250,000 of transferrable assets. Min age 21.
Benefits
1. You free up liquidity for your cash needs.
2. You can continue to enjoy coverage from your policy without having to surrender it.
3. Reap the benefits when your policy appreciates.
4. You can continue with your wealth planning and long-term financial goals.
Quantum
Min $50,000, or max of up to 2x of your annual income or 2x assets with the loan provider.

Read more here about our exclusive partnership with Philips Credit for shares and insurance backed financing

X

Apply for a start-up loan while you are still on a payroll.

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How to apply

Apply for your loan through Lendingpot to be directly connected to 45 different possible lenders.
Apply on our website
Complete Verification with Loan Specialist
Case gets listed on marketplace
Lenders reach out on offers
Get funding

Why get your property loan through Lendingpot?

Why get your Start Up Loan through Lendingpot?

A team that will support you

We have a dedicated team that will walk you through your entire loan process and help you do the market research you need.

We let lenders compete for your loan

Be ready to be spoilt for choice when we help you compare the best deals across all banks and non-banks so you only get the lowest interest rate and the highest cash out amount. Our rates are same as what the banks can offer or even better.

It’s Free! Plus get Rewards!

We do this entirely without cost to you. However our lenders pay us a referral fee to let them compete and win your business. Hence, you can be assured that our advice is unbiased and true to you.  Additionally, we give rewards to our members when they get a loan as a way to share our joy.

Why get your your Line of Credit through Lendingpot?

A team that will support you
We have a dedicated team that will walk you through your entire loan process and help you do the market research you need.
We let lenders compete for your loan
Be ready to be spoilt for choice when we help you compare the best deals across all banks and non-banks so you only get the lowest interest rate and the highest cash out amount. Our rates are same as what the banks can offer or even better.
It’s Free! Plus get Rewards!
We do this entirely without cost to you. However our lenders pay us a referral fee to let them compete and win your business. Hence, you can be assured that our advice is unbiased and true to you.  Additionally, we give rewards to our members when they get a loan as a way to share our joy.

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FAQs

What is the turnaround time for a personal loan application?
For share-backed loans, will there be a margin call should there be any averse move in the market?
For share-backed loans will I be able to sell my shares held as collateral in a market move?
What if you lose your employment during the period of your personal loan?
Why is a personal loan the best option for a start-up?

Quickly compare against 9 lenders. Get your Personal Loan through Lendingpot.

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