If you are an SME owner, there is a high chance you would have encountered finance-related issues when running your business at some point in time. In this detailed guide, we will go in-depth to understand the SME financing landscape in Singapore and the challenges involved in business financing. Our guide will endeavour to cover all aspects of financing your business.


  1. An Overview of SME Financing in Singapore
  2. Understanding your Business Revenue and Expenses
  3. Evaluating the Need for Business Financing
  4. Factors to Consider When Applying for Business Financing
  5. SME Financing Options 
  6. Peer-To-Peer (P2P) Loans & Why You Should Consider Them

Businesses, especially SMEs, have grown highly competitive in the past 10 years. Local competition is not new, but international and online competition have kept small businesses on their toes. And along with the general cost of living, cost of doing business has gone up as well. In such a scenario, it is absolutely essential for SME owners to keep an eye on their cash flow.

According to an 
NUS Enterprise study, almost half of all start-ups fail in the initial stage because of cash flow issues in the business. As one of our SME clients aptly explains, “Cash Flow is King” without cash flow, businesses cannot survive.

SMEs face a number of business challenges. According to DP Information Group’s
SME Development Survey of 2017,  the biggest challenge for SMEs is financing.
Over a third of SMEs surveyed reported finance-related issues. This was up more than 13 percentage points from the previous year and almost doubled since 2014.

What are the finance-related issues plaguing SMEs?

Based on the survey conducted between 2,522 SMEs, four main issues were highlighted by SMEs in 2017.
[skill_bar heading=”Delayed Payments From Customers” percent=”81%” style=”background-color: #5203EA”]
[skill_bar heading=”Higher Interest Rates for Bank Loans” percent=”29%” style=”background-color: #3E7EFF”]
[skill_bar heading=”Suppliers Tightening Credit Access” percent=”22%” style=”background-color: #08C0A6″]
[skill_bar heading=”Need More Collateral for Same Financing” percent=”9%” style=”background-color: #FFB50D”]

Statistics based on SME Development Survey of 2017* 

Delayed payments from customers

This is the most common issue faced by SMEs. Due to seasonal fluctuations, your clients may not be able to pay you on time. One possible solution is invoice financing, which will be discussed later in this guide. 

Related: What is Invoice Financing?

Higher interest rates for bank loans

SMEs also highlighted that they encountered higher interest rates when they go to the bank. According to this Business Times article, four in 10 Singapore SMEs lack support from financial institutions. While certain banks are recently looking to grow their SME lending, financial support for Singapore SMEs doesn’t exclusively come from banks.

Suppliers tighten credit access

As financing gets tougher for companies, suppliers start to tighten credit access to their debtors. Suppliers may require companies to pay for inventory upfront or at shorter notices. 

Need more collateral for the same financing

Typically, traditional banks would require collateral for SME loans of larger amounts. SMEs have highlighted the need for more collateral for the same financing.

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