The evaluation process is pivotal when applying for a business loan in Singapore as it aids financial institutions in assessing a business’s ability to repay the loan. At its fundamental level, eligibility criteria are employed to identify borrowers who meet basic requirements, such as being registered in Singapore.

Beyond this lies the credit evaluation criteria, which assists financial institutions in gauging the likelihood of a borrower defaulting on a loan. These criteria vary from lender to lender and sometimes across different loan products.

Here, we outline 7 factors that banks or private funders typically consider when reviewing a loan application.

1. ACRA Business Profile Information: The documentation from the Accounting and Corporate Regulatory Authority (ACRA) assists lenders in understanding your business’s structure, encompassing details regarding directors, shareholders, paid-up capital, and any other pertinent information necessary for processing the loan application. You can access your business information from ACRA by downloading it.

2. Notice of Assessment of all Directors: The Notice of Assessment (NOA) from company directors spanning the last two years is another crucial document. It aids lenders in determining a borrower’s eligibility for borrowing and the loan tenure.

3. Latest Credit Bureau Singapore Report of all Directors: The Credit Bureau Singapore (CBS) report for all directors is the third essential document required. It provides lenders with insights into any existing loans held by company directors, their repayment histories, and unsecured loan amounts.

4. Last 2 Years’ Company’s Financial Statements: Lenders also require your company’s financial statements from the past two years, including profit and loss statements and balance sheets. For companies less than two years old, first-year statements are sufficient.

5. Bank Statements Over the Last 6 Months: A bank statement covering the previous six months from the application date is necessary for applying for a business loan in Singapore. It enables lenders to understand the day-to-day banking activities of the company, including revenues, expenses, and month-end balances.

6. Private Properties: In instances where businesses are ineligible for bank loans, private funders may provide an alternative source of financing. Some private funders assess the owners’ backgrounds, such as private property ownership, which can serve as collateral for the loan.

7. Accounts Receivables Aging List: Although typically optional, an Accounts Receivables Aging List can enhance the array of loans accessible to a business. This document contains details about clients and anticipated payments for services or products rendered, aiding in eligibility assessments for loans such as invoice financing.