Singapore SMEs Hit by Record 8.47% Borrowing Costs and Shrinking Loan Access in 2024: Linkflow Capital Survey

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/

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About Linkflow Capital

Founded in 2012, Linkflow Capital is a leading SME loan consultancy in Singapore. Through its loan comparison portal and advisory services, Linkflow Capital assists SMEs in navigating the financing landscape and securing funding solutions from an extensive network of banks and financial institutions.