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What is the loan requirement for commercial properties

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When applying for a commercial property loan in Singapore, several key requirements and considerations come into play:

Documentation

  • An application form signed by all relevant parties.
  • A copy of the NRIC for the directors or partners of the company.
  • Latest 2 years of audited financial statements and the latest 3 months of bank statements for the company.

Financial Health

  • The financial health of the company, including its net profit over the last 2 years, is crucial. A clean financial record with no defaults, foreclosures, or court judgments increases the chances of securing a loan.

Business Plan

  • A clear and detailed business plan with financial projections, estimated costs, property valuations, and financial histories is essential. This demonstrates the seriousness and viability of the business venture.

Eligibility Criteria

  • The business must be incorporated locally for at least 12 to 24 months.
  • At least 30% of the company must be owned by Singaporeans or Permanent Residents.
  • Companies with a turnover of more than $20 million may be subject to additional credit assessments.

Loan Terms

  • Commercial property loans can offer up to 80% of the property’s value, and in some cases, up to 90%, depending on the financial standing of the business.
  • Loan tenures are generally shorter, ranging between 25 to 30 years, which can make longer-term loans more expensive in the long run.

Additional Fees and Considerations

  • Buyers Stamp Duty (BSD) is applicable on all property purchases, but Additional Buyer’s Stamp Duty (ABSD) does not apply to commercial properties.
  • There may be legal and valuation subsidies available, and some banks offer financing for renovation works as part of the loan package.

Application Process

  • The application process typically involves submitting the required documents, informing guarantors, and awaiting a conditional offer from the bank. The application status can be tracked, and once approved, the final offer will be presented for sign-off.
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