Your Guide to Getting the Best Short-Term Loans in Singapore

Your Guide to Getting the Best Short-Term Loans in Singapore

Entrepreneurship is booming now more than it ever did. A lot of people are now leaning towards the path of becoming business owners, in spite of the fact that, starting your own company will require tedious work and challenges. Preeminently, involving finances.

All business starts small, even so, the success of your business relies on its ability to continuously expand. Furthermore, there are times when operating or net profit won’t be enough, and startup business owners seek capital to give them a boost.

What is a Short-Term Loan?

There are times wherein you won’t make the cut for obtaining a line of credit from a bank, although, there is still some aspiration in procuring money in the form of a one-time, short-term loan in Singapore to finance your operating capital demand.

A business line of credit might come in handy when you come short in securing your utility bills, payroll, rent, inventory, and other payables that you need to attend to. It can help provide you quick cash when cash flow is lacking.

Additionally, it has shorter repayment periods than traditional loans, which makes for an exceptionally captivating alternative for small businesses that are not yet qualified to apply for a line of credit from a bank. Term loans with short maturities can help you come to face with an on-the-spot need for financing without essentially making a long-term loan.

The beauty of short term loans compared to medium and longterm loans is that they can give business owners like you peace of mind knowing that you’ll only have a short loan tenure or repayment period, which is usually between 90-120 days (as per the industry average).

Can a Short-Term Loan help you?


  • Short term financing programmes usually offer no interest rate for limited periods.  This implies that as long as you compensate for the minimum amount of your remaining balance for every month, and for as long as it is within the length of the loan, you would only need to pay for a comparatively low interest rates in relative to longterm loans where you need to pay the interest for a minimum of one year.
  • Short term loans are oftentimes useful to resolve sudden and upfront cash flow issues without obligating you to make a long-term commitment when funds are not yet accessible.
  • Short term loans permit more flexibility for your assets since the demand for a quick buck is settled through the 95% permissible conveyance of the available personal line of credit in your credit cards.


  • If you cannot honor the terms within the agreed upon length of the loan, it cancels out the low interest rate that you have to pay. If you exceed repayment beyond the expiration, you would be required to comply with relatively higher interest rates.
  • You can only loan for relatively small amounts. Due to the fact that you are expected to be in a position where you should pay for the loan in a brief time, you can only loan for fewer amounts.
  • As with most kinds of loans, you will need to pay a processing fee. The processing fee is usually small but it is still important to keep this in consideration if you are on a budget.

Types of Short-Term Loans

Personal Loan

Short-term personal loan (also available for foreigner) can help in making big purchases. It typically has a lower personal loan interest rates than credit cards. It can be used to combine multiple credit card debts into a single, lower-cost monthly payment (debt consolidation). These are also deemed to be unsecured loans wherein borrowers don’t need to put up any collateral. Instead, lenders approve personal loans by evaluating your creditworthiness.

Invoice Financing

It is a form of short-term loan where you can borrow money as provision for outstanding invoices from your customers. Lenders will give you an early payment for your receivables and unpaid invoices from your customers. Payment to the lender will occur upon settling of the invoice (the money lender will interject with the settlement of payment and take the interest charged on the loan before you receive the amount due for the bill/invoice).

Payday Loans

This is usually a small, short-term loan for emergencies that are comparatively more easy to obtain. The term “payday” in payday loan refers to when you write a postdated check (including the entire loan amount, plus interest) to the lender for when pay day arrives. Payday loans customarily possess extra high-interest rates.

Lines of Credit

This type of short-term loan is comparable to using a business credit card. By using this, you can access funds from the line of credit at any time considering you will not exceed the maximum amount or credit limit set in the agreement, and meet monthly installment payments while taking into account whatever amount has been borrowed. Businesses have been utilizing credit lines for a while now to reach working capital needs and/or capitalize on the advantage of strategic investment opportunities.

Merchant Cash Advances

In a way, this type of short term loan is more of like a cash advance but still technically set-off as a loan. The lender gives you up front the capital that you need in exchange for a portion of your forthcoming sales. How it works is, each time a purchase is made by a customer, a certain percentage of the sale is taken by accessing your credit card receipts or credit facility until the loan is repaid.

What are the Benefits of Short-Term Loans?

Short term loans are gaining popularity and for good reason. Let’s look at some of the reasons why you should consider them.

1. Quick Application Process

Most of the short-term loan lenders provide a swift and undemanding application process thus, allowing you to apply for a loan as easily as possible. The majority of short-term lenders have websites and mobile applications, therefore, less paperwork and less hassle, which gives a speedy turnaround time and makes it advantageous to apply for a loan.

2. Obtained Faster than Traditional Lending

These loans have considerably slighter risk in-contrast to long-term loans because of a shorter maturity date. The probability of even out accounts with the lender is less likely to change considerably over a short period of time. Therefore, the time it takes for the lender to subsidize the loan is shorter. Approval is usually released within 24 hours.

3. Flexibility

The previously mentioned loans are very flexible capital financing options as they can be custom made to suit your business loan funding needs in terms of repayment plan alternatives, and interest rates.

4. Easier to Acquire

Short term loans are the savior of smaller businesses who have less than optimal credit scores, by virtue of, basing on your cash flow rather than your credit history.

5. Less Interest is Paid as the Duration of the Loan is Short

A short-term loan in Singapore is more advantageous in terms of lesser interest amount payable, despite being the interest rates correlated with short-term loans are a bit pricey in some cases. Basically, the lengthier the loan, the higher the total amount of interest you pay.

6. Help Improve your Credit Score/Rating

Taking into consideration that you pay the short-term loan consistently on time, you can actually utilize your short term loan to ameliorate your credit rating or score. To such an extent that you are inclined to be eligible for acquiring a larger sum of loan for a longer period from a traditional lender in Singapore.

What are the Disadvantages of Short-Term Loans?

1. High-interest Rate

Customarily, short term loans entice higher interest rates and high monthly payments as opposed to long term loans. Given that you are financing principal debt for a brief while, you may land up paying a consequential sum every month in contrast to what you will remunerate if you opt for a long time loan.

2. The Repayment Cost is High and Frequent

There are times where you will find it strenuous to make do with the monthly payments, on account of unpredictable revenue streams. Hence, it is invariably important you make certain that cash is consistently and properly allocated to pay off these short term loans systematically.

3. Penalties for Late Payment is Expensive

Much the same as having high and frequent payment costs, you may come across penalties for being overdue with payments which are generally severe for these sorts of loans.

4. Poses More Risk

It might get tangled up in a common and painful debt trap. The flexibility and ease of access can make you plunge into a constant pattern of borrowing money. This might lead you to inefficiency in business operations and lessen your business productivity. The probability of lavishing more than you can afford is an increased possibility of frittering money away if you qualify for a lower-cost term loan. In consequence, it is sometimes inadvisable to rely on short-term loans periodically.

Where can you get Short-Term Loans in Singapore?

  • Money Lenders

You can actually find a full list of licensed moneylenders on the Ministry of Law’s website here. As of 2019, Singapore has a figure of 155 licensed money lenders. However, they are restricted by the amount that they can lend, the cost they can impose, and the allowable interest rate.

For secure loans, you are able to acquire a loan of any amount in conformity with Singapore’s Ministry of Law. The table below refers to the total maximum amount that you may borrow across all moneylenders in Singapore, anytime for Unsecured Loans:

Borrower’s Annual Income Singapore Citizens and Permanent Residents Foreigners residing in Singapore
Less than $10,000 $3000 $500
At least $10,000 and less than $20,000 $3000 $3000
At least $20,000 6 times monthly income 6 times monthly income

As of October 1, 2015, Singapore lenders can only impose a maximum rate of 4% regardless if the loan is an unsecured or secured one and it will appeal in any case of your income. Consequently, if you are unable to pay back the loan on schedule, the maximum rate of late interest a lender can charge is up to 4% per month for each month the loan is compensated behind schedule.

Here is an example of how computation lenders calculate interest; if X takes a loan of $10,000, and X has repaid $4,000, only the residual $6,000 can be taken into account for the calculation of interest.

  • Banks

While on the other hand, Singapore banks offer low-interest rates ranging from 3% to 6% per annum. Even supposing that banks are flexible with their loan amount from small to large, their approval process is quite long. And then there’s the additional need for a good credit score/rating to get a bank’s loan approval.

Private Funders

Private funders are under MAS’s excluded Moneylenders Act (Cap. 188). Private lenders can lend money only to accredited investors or corporations, which MAS defines as:

  • An Individual 

Whose net personal assets exceed in value the minimum loan amounts of SGD 2 million of which the primary residence shall not account for more than SGD 1 million of the net personal assets or whose income in the preceding 12 months is not less than SGD 300,000.

  • A Corporation

Being an accredited stakeholder (as an individual or corporation), in conformity with MAS norms, you will be eligible to avail of any type of short term loan. All of them put forward medium to large-sized loans at interest rates ranging from 10 to 17 percent per annum, which is not so much as the licensed money lenders. Although, take note that private funders/lenders commonly demand some form of insurance or collateral, which the accredited investor risks losing on condition of default.

short term loan money bag

How to Choose the Best Short-Term Loan?

As a final point, while there are few risks linked with short-term financing, sometimes a short-term loan is what you need to safeguard your business, access working capital, or even jump on a high growth path.

As is the case with finances invariably, do your due diligence, and think about engaging short-term financing consultants or experts who can guide you to choose the best possible option. Particularly at A1 Credit— the top rated licensed money lender in Singapore. Always keep in mind that overextending may withhold you from enjoying low interest rates, which can result in an endless cycle of habit-forming and crushing debts, which will also eventually ruin your entire business’ cash flow.

So before making a commitment to a short-term loan, be sure to contemplate all your options rigorously.

  • If you need a small amount of money urgently, and only for a week or a month, licensed money lenders like A1 Credit may be the right option considering how easily attainable and flexible they can be.
  • Having marketable securities or current assets that you may utilize as a mortgage for insurance with lenders. Assets that are on standby for a week or so in order for you to acquire the money can be an equitable alternative.
  • If you can wait weeks, and months to access the money, and have a good credit history, banks may be the right option. Banks offer most of the low level of interest rates and have vast diversification of loan alternatives.

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