Thinking of striking it out on your own? Do you have big plans and an ambitious vision but don’t have enough capital yet? Getting a business loan in Singapore might just be the first step you need to take!

Many business owners hesitate to take a business loan due to a range of reasons. It’s important to think carefully before applying for one.

But if misconceptions and a lack of understanding are stopping you, you will need to correct these false ideas right away.

Here, we will be looking at some of the most common misconceptions business owners have about business loans.

Misconception 1: Loan Approval Process Takes Too Long

Sometimes, business owners refuse to take a loan because they believe that loan approval processes are filled with paperwork.

They believe that lots of documents are needed and that there will be rounds and rounds of review before their application goes through. As such, many business owners forgo the option of taking a loan altogether because they need to secure cash flow quickly.

This couldn’t be further away from the truth. Loan approvals are not as lengthy or tedious as you might think. Banks may take a few days to approve your loan, but private financial institutions could approve your loan in a matter of hours.

Getting your loan approved doesn’t need to be a lengthy and tiring process.

Depending on the sum of money you need and the requirements of each private financial institution, you can get your loan approved almost immediately. You don’t need to wait a few days before hearing back about the status of your application. At Capital, you can secure your business loans within 24 hours.

Misconception 2: Difficult For Startups To Get Loans

Since startups don’t have a long track record of profits yet, many SME business owners believe that it’s almost impossible for them to get their business loans approved.

Banks, in general, have a more stringent guideline when it comes to lending out funds. Your business needs to be more mature — at least 2 years old — and you need to prove it earns at least S$300,000 in annual revenue.

However, when it comes to private financial institutions, there are plenty of schemes available.

Private financial institutions are not as concerned about the size of your business or how long your business has been around. What they are concerned with is your cash flow, your ability to repay, and your employment license.

With Capital, your business only needs to be in operation for at least 10 months and meets the annual revenue of at least S$100,000.

If you can show that you have a good financial track record, and prove you are timely in repayments, you shouldn’t have a problem securing loans.

Here’s a comparison between banks and private financial institutions



Private financial institutions, e.g. Capitall

Business operation

 Minimum 2 – 3 years

At least ONE year

Annual revenue

At least S$300,000

At least S$100,000

Loan approval

Between 2 – 3 weeks; complicated cases could take up to 1 month

Within a week or even on the same day

Having a business loan for your company can be a helpful boost for you, especially with initial operating costs.

Don’t let this myth keep you from starting your business on the right track.

Misconception 3: Taking Another Loan On Top Of An Existing Loan Will Affect Your Business Loan Credibility

Banks may not approve of your loan application if you are still repaying a different loan. This can prove to be quite problematic for new businesses that need to have access to more funds.

However, if you’re already taking a loan, that doesn’t mean you have to finish repaying it before you can get another one.

Instead of borrowing from banks, you can choose to borrow from a private financial institution. Unlike banks, private financial institutions cannot dismiss your loan application just because you are on another one.

No doubt, having an existing loan could affect your new loan application in a few ways:

  • Reduce the amount you can borrow in your next loan
  • Affect the length of your next loan’s tenure

However, this still doesn’t change the fact that you can have multiple loans with private financial institutions.

The initial years of a startup are always challenging and having access to more capital could be what your business needs to take it to the next level.

If you are sure that you can repay your loans on time, getting another business loan on top of your existing one is an option you should consider seriously.

Misconception 4: You Should Focus On Interest Rates Offered When Choosing Who To Loan From

Interest rates pay a big role in helping you choose who you should loan from. However, this should not be your only consideration. There are other aspects which you should consider seriously as well when you are taking a loan.

Besides interest rates, you should also pay attention to the loan amount, your loan tenure, how much you need to pay in monthly instalments, and processing fees.

Paying too much attention to interest rates can distract you from other costs of your loans, causing you to pay more in the end.

Having a reasonable loan tenure is also crucial as it prevents you from having a bad track record, which can hurt your future loan applications. You want to get a loan which helps you to repay comfortably, not one which ultimately puts even more of a stretch on your resources.

Other aspects you should consider include hidden charges, loan extension plans, and penalties. Depending on the circumstance of your business, these factors will play an important role in helping you decide who you should borrow from. Don’t be overly fixated on interest rates.

As a SME Digital Finance Partner, Capital provides specially tailored loans and customised repayment options designed to fit your business needs.

Misconception 5: You Only Need To Take A Loan If Your Business Is Facing Cash Issues

Business loans are not the last resort of a poor business with low prospects. In fact, business loans could be seen as a form of good debt.

Getting a business loan can be a means to help your business grow and expand. If your business is doing well, and you have plans to branch out into a different industry, a business loan can help you make that shift happen.

Oftentimes, expanding and going into new industries require business owners to be opportunistic. Predicting new trends and getting into them early are opportunities that come and go; you don’t want to lose out just because you didn’t have enough funds at that point in time.

In situations like these, getting a business loan is a wise choice to make. Being strategic about your business loan is an effective and affordable use of financing to help you bring your business to the next level.

Additionally, business loans are also useful in helping you ensure liquidity and pay monthly expenditures. Every business has day to day operational costs. With a business loan, you can have sufficient working capital to help you pay bills and staffing costs in the event where clients take longer than usual to make payments.


Getting a business loan in Singapore is not a sign that your business is doing poorly. Business loans often have a bad reputation because of certain misconceptions people have regarding debt.

Some see debt as a sign of a business owner’s inability to run their business well. Others might think of debt as an added burden that they will struggle to pay off.

However, if you have the right mindset, business loans can prove to be useful for your business.

Find out more on the types of business loans available and how you can apply for one that suits your business needs.

Understanding how to fully utilise loans, be strategic with your resources, and be clear of what kinds of loans you are going to borrow, is vital for every business owner.

Don’t let misconceptions keep you from getting the funds you need to grow your business. Experienced financial consultants at Capital can walk you through the process and help you find what you need.