SME borrowing costs ease to 8.18% in 2025 but Middle East risks loom over 2026

Loan approval rates rose to 74% but bank processing times stretched to 33 days amidst shifting credit conditions.

Singapore SME borrowing costs eased to an average of 8.18% in 2025 from 8.47% in 2024, whilst loan approval rates rose to 74% from 70% over the same period, according to SME loan consultancy Linkflow Capital.

The study also found that loans above $500,000 returned in 2025, accounting for 5% of approved loan volume after being absent in 2024, however bank loan processing times lengthened to 33 days, compared with 22 days in 2024, whilst non-bank funders disbursed loans in about seven days.

Amongst rejected applications, cases linked to adverse personal credit records increased to 11% in 2025 from 3% a year earlier.

The survey also showed that 82% of SMEs seeking financing did not have existing bank loan facilities.

Foreign banks accounted for 38% of approved loan volume in 2025, while local banks made up 46% and digital banks 11%.

Linkflow Capital said the Middle East conflict, which began in February 2026, is expected to add pressure to SME operating costs through higher freight, energy and shipping expenses linked to disruptions in the Strait of Hormuz.

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