2024 saw a troubling trend in business closures, according to a report published by the Accounting and Corporate Regulatory Authority (ACRA) of Singapore. A total of 56,291 businesses ceased operations, and this number is expected to rise even further in 2025. One of the most significant causes of this uncertainty is the US and recession fears fueled by the ongoing US-China trade war. 

With more businesses struggling to stay afloat, there has been a noticeable increase in companies seeking business loans to stabilise operations. However, Linkflow Capital, a loan comparison platform, discovered that only about 70% of financing applications were approved in 2024, as compared to 76% the year before, leaving many business owners with limited options. The pressure is real, especially for small and medium-sized enterprises (SMEs), which are often more vulnerable during economic downturns.

Risks from Trade War and Potential Recession

How will the potential economic recession impact Singaporean SMEs, along with the US-China tariff trade war? Let’s explore here:

1. Interest rate trends

The US Federal Reserve has started reducing interest rates, but the pace remains cautious due to ongoing cost-push inflation triggered by tariff measures. Although rates are no longer climbing, borrowing costs remain a concern for many SMEs in Singapore.

Local banks often mirror the Fed’s movements, and any shifts in global interest rates can still affect financing conditions. For SMEs, this means access to capital might remain expensive or uncertain, especially for those already managing tight profit margins or disrupted supply chains.

2. Reduced consumer spending

The fear of a recession leads to widespread cautious behaviour. Consumers, uncertain about their job security or rising prices, may cut back on spending. For businesses that rely on consumer confidence and purchasing power, this drop in demand is damaging. Retailers, manufacturers, and service providers may see a dip in revenue, making it harder to cover operational expenses or invest in growth.

3. Disrupts supply chain stability

Additionally, the trade war has caused widespread disruption in the global supply chain. Tariffs, regulatory uncertainty, and shifting geopolitical relationships have led to longer lead times, increased costs, and limited availability of essential goods and components. For businesses, this means delays, unexpected expenses, and unhappy customers. All of these problems can reduce competitiveness and increase the need for financial support to keep operations running smoothly.

How Financing Protects SME’s Stability

Having access to funds can be the difference between staying afloat and shutting down. Here’s how the proper financial support helps SMEs cope during challenging times like a US recession scenario and a continued trade war:

1. Maintains cash flow

When revenue dips or unexpected costs arise, financing ensures the business still has enough cash to pay employees, suppliers, and rent. This cash reserve protects operations and avoids a downward spiral caused by late payments or defaulting on obligations.

2. Secures inventory

Stable financing allows businesses to stock up on essential inventory even when demand is unpredictable. As a result, they will be better prepared when demand returns and help them avoid disruptions from shipping delays or supplier shortages triggered by the trade war.

3. Allows bulk purchasing to save expenses

Buying in bulk usually means lower prices, especially for products affected by international tariffs or uncertain supply lines. Financing allows SMEs to make large purchases that reduce overall costs in the long run, helping them remain competitive.

4. Supports market diversification

Having extra funds on hand can help businesses expand to new markets. Whether it’s investing in digital marketing, launching new products, or entering a different customer segment, financing can support businesses in exploring new revenue streams.

5. Helps with debt management

When a business is juggling multiple loans or overdue bills, an innovative financing solution can consolidate debt or cover payments. It will help you ease cash flow pressure and allow your business to regain control of its financial health.

6. Contributes to efficiency improvement

New equipment, updated software, or better logistics can boost productivity and reduce costs. Financing gives businesses the ability to make these upgrades, which can be essential during a US and recession in the US when margins are tighter than ever.

What Kind of Financing Can You Apply For?

If you’re a business owner wondering what financing options are available to help you navigate the stormy waters of the trade war and economic uncertainty, you’re not alone. Fortunately, there are flexible and accessible solutions, such as:

1. Business Term Loan

A Business Term Loan is ideal for businesses that need a larger sum to cover mid-to-long-term financial needs. Whether it’s expanding your business, bridging seasonal cash gaps, or investing in growth, this type of financing offers stability and predictability with fixed repayments.

With Funding Societies, businesses can apply for financing between S$100,000 and S$1 million, giving you a wide range of support depending on your needs. The loan tenor can stretch up to 36 months, making it manageable and aligned with your revenue cycles. 

Best of all, there are no collaterals required, removing a significant barrier that often stops SMEs from applying. If time is of the essence, you’ll be glad to know that the loan can be disbursed in as fast as 7 days, giving you quick access to essential capital when you need it most.

2. Micro Loan

Sometimes, smaller loans can go a long way. For newer businesses, or those that just need a short-term boost, Micro Loan is a flexible and efficient choice. It’s perfect for meeting urgent working capital needs, stocking up on inventory, or covering unexpected expenses.

Through Funding Societies, you can access loan amounts of up to S$150,000. The application process is straightforward and can be completed in under 10 minutes, meaning no lengthy paperwork or complicated steps. Once approved, you could receive your funds in as little as 24 hours, which is ideal for time-sensitive needs. 

Loan tenors are available for up to 18 months, giving you room to breathe and plan repayments comfortably. Even better, there are no fees for early repayment, so you’re free to pay off the loan earlier without penalties, helping you save on interest and take control of your finances.

3. Start-Up Financing

For early-stage businesses or those launching new initiatives, Start-Up Financing offers a fast and founder-friendly solution. It provides a fixed loan amount of $10,000 or $15,000 over a 5-month tenor with 0% interest as long as repayments are made on time.

Complete the entire application in under 10 minutes, and get funds within just 2 working days upon approval. It’s especially useful for startups needing working capital for marketing campaigns, inventory, or equipment purchases, without taking on the burden of high interest or long wait times.

Fintech startup funding Singapore

The effects of the US and recession concerns, coupled with the ongoing trade war, are far-reaching. For businesses in Singapore and across Asia, these global issues translate into real local challenges: higher costs, reduced consumer confidence, and unstable supply chains. It’s no wonder the number of business closures is rising, and why more companies are turning to external financing to survive.

Platforms like Funding Societies make it easier than ever for SMEs to access the support they need, without the traditional hurdles of collateral and long approval times. Whether you’re facing disruption from the trade war, worried about economic recession, or just trying to prepare for what comes next, now is the time to explore your financing options and future-proof your business. Find out how you can apply here!

Dorcas Pang
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