Construction Business Loans Singapore

Starting a construction company requires S$300K-S$1.2M depending on license grade. This includes BCA contractor license (S$30K-S$100K), initial equipment (S$150K-S$600K), performance bonds (S$50K-S$200K), and 6 months working capital. Higher BCA grades (L4-L6) require significantly more capital but allow larger project tenders.

Yes, banks and equipment lenders offer financing up to S$3M for construction machinery. Equipment serves as collateral with 20-30% down payment typically required. Repayment terms of 5-10 years match equipment lifespan. Some lenders partner with equipment dealers for competitive rates and streamlined approval within 1-2 weeks.

Construction firms use project financing and progress payment bridging loans to manage cash flow gaps. Banks offer credit facilities that disburse against certified progress claims, covering 70-80% of milestone values. Maintaining 3-6 months operating reserves is crucial. Invoice financing against receivables provides additional liquidity during payment delays.

BCA requires paid-up capital, qualified technical personnel, past project experience, and financial standing based on license grade. Banks prefer contractors with L5-L6 grades for larger loans. License application costs S$30K-S$100K. Most lenders require valid BCA license before approval, though some support license upgrade financing for established contractors.

Yes, but requirements are stricter with higher collateral needs (40-50% of loan amount). Banks evaluate founders construction experience, technical qualifications, and project pipeline. Government schemes like Enterprise Singapore Loan provide support for new contractors. Personal guarantees are mandatory, and starting with smaller L1-L3 grade licenses improves approval chances.

Performance bonds (typically 5-10% of contract value) tie up credit facilities but demonstrate project credibility. Banks view secured government contracts with bonds favorably as they reduce payment risk. Bond financing facilities allow contractors to pledge bonds without consuming working capital lines. Strong bond track record can improve overall loan terms and limits.

Required documents include: BCA contractor license, 2-3 years audited financials (or projections for new businesses), current project list with contracts, work-in-progress schedules, equipment ownership records, performance bond details, bank statements (6-12 months), and shareholders NRIC. Strong project pipeline significantly improves approval odds.

Yes, acquisition loans of S$500K-S$5M are available for purchasing established construction firms. Banks evaluate target companys BCA grade, project pipeline, equipment assets, and client relationships. Due diligence period of 2-4 months is typical. Combining seller financing with bank loans reduces upfront capital needs. Retention of key personnel and clients is crucial for approval.

Foreign worker levies (S$300-S$950 per worker monthly) are significant operational costs. Banks factor levy costs into cash flow projections and working capital requirements. Construction firms should budget S$50K-S$200K annually for levies depending on workforce size. Some lenders offer seasonal credit facilities aligned with project workforce scaling needs.

Construction business loan rates range 5-13% annually: Established contractors with strong project pipeline (5-8%), Mid-size firms with BCA L4-L5 (7-10%), New contractors or equipment financing (9-13%). Government-backed schemes offer lower rates (3-5%). Factor in processing fees (1-2%), bond facility charges, and compare at least 3-4 construction-specialized lenders.