There is no single bank that is best for every SME.
The right bank depends on your company’s financial profile, industry, business history, existing facilities, ownership structure and how much financing you are looking for.
A bank that works well for one company may not be the best option for another. This is because different banks have different credit criteria, lending appetites, industry restrictions and approaches to assessing SME financing applications.
The important question is therefore not simply “Which bank is the best?”
It is:
“Which bank is most suitable for my business and financing requirement?”
Why different banks can give different outcomes
Banks do not all assess an SME in exactly the same way.
Even when two banks receive the same financial statements, the outcome can differ because they may have different views on:
- Industry and business activities — Certain industries may be more restricted or less preferred by particular lenders.
- Financial performance — Revenue, profitability, margins and cash position can be viewed differently depending on the lender’s credit criteria.
- Existing liabilities — Your current loans and financial commitments affect how much additional financing a bank may be comfortable with.
- Company vintage — The length of time your company has been operating can affect eligibility and credit assessment.
- Credit profile — The company’s credit history and the profile of directors or shareholders providing a Personal Guarantee can matter.
- Ownership structure — Shareholding and the individuals standing behind the facility can affect the available financing routes.
- Facility type — A Working Capital Loan, Business Term Loan, trade facility or other form of financing may have different qualifying requirements.
This is why choosing a bank should not be based purely on which bank advertises the lowest rate.
Your existing bank may not always be your best option
Many business owners naturally start with the bank where they already maintain their operating account.
That can make sense. The bank may already have visibility over your account conduct, transaction history and business activity.
However, that does not automatically mean it will offer the highest quantum, lowest pricing or most suitable facility for your requirements.
If your funding requirement is significant, it can be worth assessing other participating banks as well.
The objective is not to apply everywhere.
It is to identify the banks where your particular case has the strongest fit.
How we assess which banks to approach
At Cornerstone Capital Services, we start with the business rather than starting with a particular bank.
We look at your:
- Company financials
- Revenue and profitability
- Existing loans and liabilities
- Bank statement conduct
- Company vintage
- Industry and business activities
- Ownership structure
- Personal Guarantee profile
- Funding requirement
- Purpose of financing
From there, we assess which financing routes and participating banks may be suitable for the case.
Depending on the profile, this may involve considering a Working Capital Loan, Business Term Loan or other financing facilities rather than simply submitting the same application to every bank.
Should you apply to several banks?
Depending on your requirements — but the strategy matters.
Submitting applications blindly to multiple banks is not the same as having a properly planned multi-bank strategy.
Each application should be considered based on the company’s profile, the lender’s criteria and the amount of financing required.
For a stronger case, the objective is to approach suitable lenders with a clear understanding of:
- How much financing the business needs
- Which facilities may be appropriate
- Which banks are likely to be suitable
- What issues may affect approval or quantum
- How the overall financing should be structured
This is where proper assessment becomes important.
What about interest rates?
Interest rate is one part of the equation, but it should not be viewed in isolation.
A bank may offer a lower rate but provide insufficient financing for what the business actually needs.
Another bank may be able to support a higher quantum or more suitable tenure, making the overall financing more useful to the business.
For SME financing, you should consider the full picture:
Quantum + interest rate + tenure + repayment structure + fees + facility terms.
The objective should be to secure financing that is both suitable and competitively priced for your company’s profile.
So, which bank should you choose?
The answer depends on your company.
There is no universal ranking of “best SME bank” that can accurately tell you which lender is right for every business.
A construction company with several concurrent projects may have a very different financing requirement from an F&B operator opening another outlet or a trading company looking to increase inventory.
The bank selection should follow the business requirement and financial profile, not the other way around.
Let us assess your financing options
If you are considering an SME loan in Singapore, we can assess your company’s financial position and funding requirement before determining which financing routes may be suitable.
Rather than simply asking “Which bank is best?”, the better starting point is:
How much do you need, what do you need the funding for, and what can your company’s financial profile realistically support?
Once we understand those three things, we can work backwards to determine the financing strategy and lenders worth considering.
