Financial management requires financing. Personal and corporate loans are available to Singaporeans. Business loans help corporations finance their operations, grow, or engage in new projects, whereas personal loans help people buy cars or pay for medical bills.
Deciding between a personal loan and a company loan can be difficult, especially for small business owners. This tutorial covers Singapore’s personal and business loans, their features, and how to choose the proper financing choice.
Business loans and personal loans differ in purpose, loan amount, repayment time, interest rates, and eligibility. Knowing the distinctions between the two loan kinds might help you choose the right financing option.
We’ll discuss Singapore’s personal and business loans’ eligibility, loan amounts, and repayment terms in this post. We’ll also compare the two loan types and help you pick the correct one.
At the end of this article, you’ll comprehend Singapore’s personal and business loans and be better prepared to choose one.
Also read: What is SME term loan?
Features of Personal Loans
- Unsecured
Personal loans are collateral-free. Personal loans are appealing to those without collateral.
- Fixed Interest Rates
Most Singaporean personal loans have set interest rates. Knowing how much to pay each month makes budgeting easier.
- Repayment Period
Singapore personal loans have one-to-seven-year repayment periods. Longer repayment periods cut monthly payments but increase interest paid.
Eligibility Criteria for Personal Loans
Personal loan eligibility in Singapore varies per lender. Standards include:
- Borrowers must be 21 or older.
- Income: The borrower must earn SGD 20,000 annually.
- The borrower must have decent credit.
Business Loans in Singapore
Business loans are used to fund operations, expansion, and new enterprises. Singapore banks and peer-to-peer lending platforms offer business loans.
Features of Business Loans
- Secured or Unsecured
Business loans can be secured or unsecured. Secured loans require property or equipment as collateral. Unsecured loans feature higher rates but no collateral.
- Fixed or Variable Interest Rates
Business loans have fixed or variable interest rates. Variable interest rates alter with market conditions, but fixed rates don’t.
- Repayment Period
Singapore business loans have one-to-ten-year repayment periods. Longer repayment periods cut monthly payments but increase interest paid.
Eligibility Criteria for Business Loans
Singapore business loan eligibility depends on the lender. Standards include:
- Business Age: Lenders require six to two years of firm operation.
- Revenue: The lender requires a minimum annual income of SGD 50,000–500,000.
- The company must have solid credit.
- Secured loans require business collateral like property or equipment.
Personal Loan vs Business Loan: Which one to choose?
Personal or corporate loans rely on your demands and finances. Consider these:
- Purpose of the Loan
Personal or corporate loans rely on your demands and finances. Consider these:
- Loan Amount
Loan amount is also important. Business loans range from SGD 1,000 to SGD 200,000, whereas personal loans are usually lower. Business loans range from SGD 50,000 to SGD 5 million, depending on the lender.
- Repayment Period
Loan payback is the timeframe. Business loans have one- to seven-year repayment durations, whereas personal loans have shorter terms. Business loans offer one-to-ten-year repayment durations.
- Interest Rates
Loan costs depend on interest rates. Business loans are cheaper than personal loans. Business loan interest rates are 3% to 8%, while personal loan interest rates are 5% to 9%.
- Eligibility Criteria
Personal and commercial loan eligibility differs. Individuals loans require a minimum yearly income of SGD 20,000, whereas company loans demand SGD 50,000 to SGD 500,000, depending on the lender.
Come across: SME loan requirements
Conclusion
Deciding between a personal loan and a business loan in Singapore depends on various aspects, including the loan’s purpose, quantity, payback time, interest rate, and eligibility. Personal loans are for individuals who require finance for personal reasons like house renovations or trips, while business loans are for businesses that need money for equipment purchases or expansion.
Before picking a personal or business loan, compare lenders and loan possibilities. Knowing the benefits and qualifying requirements of each loan type might help you choose the right one.
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