Top SME loan myths debunked

If you’ve been considering a loan for your SME’s financing needs, some of your concerns may be unfounded. We debunk some common myths on small business loans.

Top SME loan myths debunked

Myth #1: As a SME owner, I’ll have to put all my assets on the line to secure a loan.

One common misconception SME owners have is that they are “risking it all” by taking out a bank loan. If your business requires funding, consider an unsecured loan for your financing needs. The DBS working capital loan, for example, is a collateral-free loan option which allows you to borrow up to $300,000 over a five-year period.

Myth #2: Bank loans have rigid repayment structures.

Contrary to what many borrowers think, it is possible to secure a loan quickly under flexible repayment terms. If your SME requires quick access to funds, consider a DBS overdraft facility. You only incur interest charges on the amount you actually use with the bank overdraft facility, and there is no fixed repayment schedule as it is a revolving line of credit.

Myth #3: You need a perfect credit rating to apply for a bank loan.

While banks do consider your credit rating while assessing your loan application, they look at other aspects of your application such as the purpose of the loan, the availability of collateral and so on. If your business has a poor credit score and you don’t immediately require funding, take the time to improve your credit standing by reducing the number of credit facilities you have with other financial institutions; paying your debts off in full; and refraining from applying for numerous loans concurrently.

Myth #4: Applying for a bank loan requires a ton of paperwork.

If the prospect of numerous bank visits and spending hours filling up forms is getting you down, think again. Applying for a SME loan is easy with DBS – all you have to do is fill in a simple online application. No branch visits or signatures are required – simply submit your application and supporting documents, and wait for your loan to be reviewed. You’ll need to submit a copy of your NRIC, income tax assessment (NOA) for the last two years, and your latest debtor/creditor aging list.

Myth #5: The less you borrow, the better.

If you think taking a smaller loan is better than a larger one, think again. Depending on what you plan on using the funds for, a larger loan could help you achieve your business objectives more quickly. Furthermore, it could be possible to borrow a larger amount at a lower interest rate, depending on the bank’s prevailing terms. Find out more about how much a loan will cost with DBS’ loan calculator.

It’s easy to apply for a SME loan with DBS – submit your online application today and enjoy attractive rates from Singapore’s largest provider of SME micro loans and working capital loans.


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