Bugis Credit Pte Ltd is a licensed moneylender (License No. 25/2024) listed in the Registry of Moneylenders, under the Ministry of Law in Singapore.

Money Lender vs. Bank Loan for Business: A Deep Dive On Business Financing

Money lender vs Bank Loan For Business

In 2020, businesses in Singapore and the entire world applied for hundreds of thousands of unsecured loans to have enough capital that can help them transition to digital and contactless operations. Banks and licensed money lenders have come to the aid of hundreds of Singaporean businesses, allowing them to wade through the economic paralysis the year brought.

In proportion to unsecured loans, licensed money lender and bank business loan applications reached new heights. However, many rejected loan applications left businesses without any capital for transition, forcing many business owners to use incompatible personal loans to leverage individual excellent credit history.

In 2021, licensed money lenders and banks learned better by offering much more flexible and accessible options for businesses looking for an unsecured or semi-unsecured loan to help their businesses transition to their next level. If you’re confused about which one to choose for your business, here’s a comprehensive post we’ve made to help you.

Licensed Moneylender Vs. Banks: Key Differences

All licensed money lenders in Singapore are government-regulated entities separate from banks. They offer tailored financial products for Singaporeans and foreigners who cannot access traditional bank services because of their poor borrower’s credit reports.

Licensed money lenders are dissimilar to banks in many ways when it comes to the following areas:

  1. Eligibility

Moneylenders require applicants to comply with the following requirements:

  • The company must be registered in Singapore
  • Must be operational for at least one year
  • Has a minimum yearly turnover of S $60,000

Business bank loans typically ask for the following

  • The company must be registered in Singapore
  • Must be operational for at least two years and above
  • Minimum yearly turnover of S $300,000 yearly
  1. Requirements

A licensed moneylender requires the following documents during the approval process:

  • All directors and partners NRIC
  • Recent information report (Business Profile) from the Accounting & Corporate Regulatory
  • Recent Income tax assessment notice (both personal & from the company)
  • Recent financial statement
  • Recent invoices or business contracts
  • Recent utility bills under the company name
  • Recent 6-month bank statements
  • List of assets owned by the company, directors & partners (if any)
  • Office/shop tenancy agreement (if any)

Banks typically ask for the following to ensure loan approval:

  • ACRA or MyInfo Business
  • Last two year financial statements
  • Additional documents depending on the bank
  1. Credit Score Check

Licensed moneylenders will conduct a hard pull of each business owner’s credit report but will not use it as the basis for your loan application. They consider each borrower’s income annually as a much higher factor in approving their loan application.

Banks greatly consider credit scores as a risk-assessment metric, which means they will greatly evaluate the credit score of each business owner who is borrowing money and plans to have their loan approved.

  1. Loan Amount

Licensed moneylenders can offer up to 12 months of each applying business owner’s salary up to S $200,000 maximum

On the other hand, banks can provide from S $20,000-S $500,000. However, how much money you can get from a business loan depends on the bank’s assessment of your business activities.

  1. Interest Rates

All licensed moneylenders can charge you 5-15% interest on your business loan. Financial institutions can charge you varying interest rates that can be lower or higher than licensed moneylenders. Plus, you can choose to pay your loan either through a flat or effective interest rate.

  1. Repayment Period

Licensed money lenders allow borrowers to repay their entire financing within two years. Alternatively, banks can provide you up to 1-5 years to repay your loan with higher interest rates, the only consequence for the longer repayment period.

  1. Application Process

Both banks and licensed have online application portals for business loan applicants. You can take photos or scan all required documents for the application.

  1. Cash Disbursal Speed

Licensed money lenders may disburse your cash within the same day. You won’t need to open new savings accounts to accommodate the disbursal – they’ll deposit it straight to any existing personal or business account.

On the other hand, banks will ask you to open a bank account with them because they’ll use it to deposit your business loan. Some banks can approve your loan within the same week, while some might take a few more weeks to a month, depending on your loan application status.

Pros and Cons of Both Moneylender and Bank Loans For Business

Here’s a comparison of the major differences between banks vs. licensed money lender bank loans.

Licensed Moneylenders Bank Loans
Faster approval and loan disbursal rate High-quality bank business loans that are accessible for everyone
Receive the cash in person. It’s not necessary to open a new bank-specific account. Long-term payment periods extending from 1-5 years
Available to low and poor-credit borrowers Can apply flat or effective interest rate (EIR) on your current
Up to S $200,000 Offers up to 12 months of your monthly salary
No processing fees Can waive processing fees depending on your term
12-24- month repayment period can be short May require weeks to disburse payments
Late fees with penalties depending on agreement. Requires a registered bank account for loan disbursal
  Needs borrowers to have a high credit score
  Typically has a high minimum income and loan amount requirement

Frequently-Asked Questions

Let’s dive deeper into what makes each of these financial products a great counterpart of each other.

  1. What Are Moneylender Charges I Should Know About?

Licensed money lenders can charge you the following:

  • 5-15% per month
  • Late penalty fees (that depend on your agreement with the licensed moneylender)
  1. Which Bank Loan Charges Should I Keep Note Of?

Banks can charge you the following for business loans

  • 3-6% (or higher) interest rates (and even higher EIRs)
  • Processing fees
  • Late penalty fees
  • Early repayment fees
  • Transaction fees (if borrowers need to mediate certain contract portions with their lenders)
  • And other fees specified by the bank.
  1. Is It Safe to Borrow Money From Licensed Money Lenders?

To be a moneylender in Singapore, you’ll need to have an active moneylending license. Moneylenders have rules set by the Ministry of Law, and then a prospective licensee must follow them to be eligible. 

The Registry of Moneylenders registers, tests, and revokes all licensed moneylender licenses. You can run a money lending business after you’re licensed, which comes after passing a series of examinations. Failure means disqualification from operating for a fixed period of time.

Loan sharks are unregulated lenders in Singapore. Do not interact and use their services by any means.

  1. How Do I Know If a Licensed Money Lender is Registered?

You can visit the Registry of Moneylenders for the complete list of licensed lenders in Singapore.

In addition, any unsolicited text message, chat, or correspondence from a money lender violates the Registry’s advertising restrictions.

Here’s a complete list of licensed moneylender restrictions all lenders must follow:

  • No outreach campaigns that involve unsolicited messages and retained email lists
  • No advertising through social media
  • Advertising outside their designated physical branch
  • Any activity that involves initiating the first contact
  1. What’s The Total Personal Loan Amount I Can Get From Singapore’s Financial Institutions

Both banks and licensed moneylenders can offer you up to 12 months maximum financing for borrowers with good credit (in the case of personal loans). However, on average, you can get about 6 months of your salary..

  1. Is a Moneylender Business Loan Much Higher Than Their Personal Loan Payout?

Business loans always have much higher payouts than personal loans because they factor in the income and payment capabilities of multiple individuals in a group rather than a single borrower. In Singapore, banks and financial institutions have a loan cap for multiple-owned businesses. For example, Standard Chartered has a S $200,000 business loan limit that safeguards its interests and mitigates risks successfully.

  1. Is It Practical to Use Personal Loans As Substitutes For Business Loans?

A typical Singaporean personal loan can only provide you up to six months of your monthly salary. It’s much worse with licensed moneylender personal loans because you only have 12 months to pay for your entire financial commitment, which is challenging for most business owners who risk their personal integrity to save their respective businesses.

A business loan grants you a 12-month minimum repayment term for your finances. Alternatively, they can grant you up to 5 years to completely repay your loans.

  1. Can I Use Business Loans on Everything I Want?

No, you cannot. Banks, financial institutions, and licensed moneylenders will ask for your business balance sheet, inventory, and previous-year experience as a basis for approving your loan. Banks are stricter than licensed moneylenders regarding your sales, profits, and upkeep balance sheets.

With these stringent measures in place, you cannot borrow a business loan and use it for just anything you want.


  1. Choose Moneylenders For The Following Reasons

  • Convenient for low or poor credit score borrowers
  • Need quick cash immediately
  • Aren’t qualified for bank and government-backed business loans
  1. Choose Banks For The Following Reasons

  • You want the highest possible loan amount you can get
  • You have an existing bank account with them
  • You want a long-term payment period.

Bugis Credit is Singapore’s finest licensed moneylender that can provide you with the business loan amounts you need. Request for a quote today!

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