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Startup Business Loan – What You Should Know About It

Startup Business Loan – What You Should Know About It

You cannot overstate the significance of capital in business at any time. Starting a business necessitates working capital to meet the startup costs for renting a space, purchasing inventory, equipment or machinery, and daily operations. Getting sufficient capital and managing is a crucial aspect of a business. You need sufficient funds to develop your business and increase revenue, regardless of its size, whether small or medium. 

Singapore's thriving economy, suitable infrastructure, competent workforce, robust trade, an alluring investment environment, and open regulations make it a highly attractive business destination. Further, it also offers several options for a startup business loan. Here are a few significant ones: 

1. Government-Assisted Programmes or Grants

The Government of Singapore has designed many attractive funding programmes or schemes to assist startups with funding and infrastructural support in the early stages to develop their businesses. You can find a few programmes and plans for startups and new entrepreneurs:

  • Startup SG Schemes

With the Startup SG, the Government of Singapore drives the growth of innovative startups, supported by the Standards, Productivity and Innovation Board (SPRING). It is one of their efforts to promote the development of creative startups.

Startup SG gives startups in Singapore opportunities for funding, talent, and mentoring to support the growth of their business ideas into successful businesses. Business enterprises in Singapore that fulfil the requirements can get business loans, funding, and equity financing through Startup SG Tech, Startup SG Equity, Startup SG Infrastructure, and Startup SG Founder schemes.

2. Startup Business Financing

The "first business loan", also known as the business pitch loan, is a scaled-down version of the standard business loan with a ceiling of SGD 100,000. 

Small business enterprises or startups in Singapore can get a business loan of a minimum of SGD 100,000 at an attractive interest rate to help grow and expand their operations. With it, they will have adequate cash reserves for running their everyday business operations.

Microbusiness operators who require modest capital without high interest rates and lengthy payment terms can benefit from startup business loans. You can get these loans easily because they demand only a brief operating history and not extensive financial information. Some of the financing options for new businesses in Singapore are:

  • Venture Debt Financing

Being a non-convertible loan, Venture debt financing from DBS is a secured financing option for tech startups. It is a financial strategy that works conjointly with equity funding for a small business enterprise. Venture debt financing helps: 

  • Lessen equity dilution: You can fast develop your startup company by securing a venture debt loan without losing the ownership interest.
  • Venture debt: It protects your company from excessive interest rates by serving as a buffer. It also lowers the cost of borrowing.
  • Promote growth: You can utilise the business loan to finance capital expenditures and business acquisitions.

With venture debt funding from DBS, your startup can: 

  • Gain immediate access to the DBS worldwide network
  • Enjoy low share or equity dilution
  • Work jointly with experienced entrepreneurs
  • Earn more returns on shares
  • Extend the cash runway

To be eligible for this business loan, your startup should formulate a feasible business plan, a minimum of SGD 3 million equity financing from institutional investors, and the steadfast support of a venture capitalist partner.

3. Business Loans Online

Eligible SMEs can obtain a business loan of SGD 2 million, repayable within 5 years from leading banks like DBS. Loan applications submitted online can be approved in a matter of hours with minimal paperwork. The government's resilience budget allows you to apply for and get a startup business loan, paying nothing but interest for the first year.

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