Drawing on data from over 2,216 unique users on its SME loan comparison platform, Linkflow Capital’s research reveals a stark financing environment for SMEs:
The survey also captured shifts among lenders. While local banks maintained the largest share (59%) of loan origination within Linkflow Capital’s platform, foreign banks have significantly increased their share to 26% (up from 19%). Digital banks saw their loan share decrease more than half to 8% of loan originations (down from 17% in 2023).
Beyond higher costs, SMEs encountered tighter credit access, particularly for substantial funding needs. Linkflow Capital’s data showed a sharp decline in approvals for loans above S$300,000. These larger brackets constituted only 3% of approved loans in 2024, down from 10% in 2023.
Notably, approvals for loans exceeding S$500,000 ceased entirely in the surveyed data for 2024.
“SMEs were caught in a difficult bind in 2024 – needing capital to navigate rising operational costs but facing the highest borrowing rates we’ve seen in years and finding it much harder to secure larger loan amounts required for expansion,” said Benjamin Teo, spokesperson for Linkflow Capital. “This reflects increased lender caution driven by higher SME debt servicing ratios and the unwinding of earlier government support schemes.”
Outlook:
Early
signs
of
stabilization,
but
risks
remain
Looking
ahead,
early
signs
of
rate
relief
are
emerging.
The
3-month
SORA
benchmark
has
fallen
from
3.03%
in
January
to
2.55%
by
April
2025.
However,
business
lending
rates
are
expected
to
adjust
slowly
and
partially,
with
any
reductions
possibly
materializing
only
from
Q3
2025
onwards.
Policy
support
remains
critical
The
permanent
raising
of
the
SME
Working
Capital
Loan
cap
to
$500,000,
announced
in
Budget
2024,
provides
a
key
buffer.
Nevertheless,
cashflow
pressures
are
intensifying:
Teo
concludes:
“Given
Singapore’s
heavy
trade
exposure,
with
trade
volumes
three
times
GDP,
SMEs
remain
vulnerable
to
external
shocks
like
the
US-China
trade
war.
Pre-emptive
financing
planning
and
maintaining
liquidity
buffers
will
be
crucial
to
navigating
the
uncertain
quarters
ahead.”
The full survey detailed findings and charts are available at: https://smeloan.sg/blog/2024-sme-finance-accessibility-survey/
https://smeloan.sg/
https://sg.linkedin.com/company/linkflow-capital-pte-ltd
Hashtag: #Linkflow
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