How should a Singapore SME finance equipment or inventory?
The Lendela Team
November 11th, 2026
Table of contents
- Match the tenor to the asset's earning life: years for equipment, months for stock.
- Bank equipment financing covers 80 to 90% of the price over 5 to 8 years, depending on the bank.
- The EFS Fixed Assets loan runs up to 15 years and the EFS Trade Loan up to one year, within a $50 million cap per borrower group across all EFS loans.
- Under hire purchase, the financier owns the equipment until the final payment.
- EDGE grants are paid as a reimbursement after full payment, so the purchase must be funded upfront.
Match the financing to how long the asset keeps earning. Equipment that earns for five years or more suits an equipment loan or hire purchase repaid over a similar period: DBS and Hong Leong Finance cover up to 90% of the price over up to 5 years, OCBC up to 90% over up to 8 years, and UOB up to 80% over up to 5 years. Stock that sells within months suits short trade financing, such as a trust receipt or the Enterprise Financing Scheme Trade Loan, which has a one-year tenor and is repaid as the goods are sold. For larger purchases, Enterprise Singapore's EFS Fixed Assets loan covers equipment, machinery and business premises over up to 15 years, with the government sharing 50% of the bank's risk, and up to 70% for young enterprises. Since 1 April 2026, Fixed Assets and Trade Loans are capped only by a combined $50 million per borrower group across all EFS loans. Getting the match wrong costs money either way: a short loan for a long-lived machine squeezes monthly cash flow, while a long loan for stock leaves you paying for goods long after they have been sold. Grants also arrive late. EDGE, which replaced PSG and EDG for new applications on 30 September 2026, reimburses part of the cost only after you have paid in full, so plan to finance the whole amount first.
Why does the asset's earning life decide the financing?
Because the repayments should come out of the money the asset makes. A machine that saves labour for eight years can repay its own loan over five. Stock bought in November and sold by February should be paid off by February, not still costing interest in 2028.
What you are buying | How it earns | Financing to consider | Typical tenor |
|---|---|---|---|
Production machinery or automation | Over several years | Equipment loan, hire purchase, EFS Fixed Assets | 5 to 8 years from banks, up to 15 under EFS |
Commercial vehicles | Over several years | Hire purchase | Up to 7 years (UOB, new vehicles) |
Stock for resale | Within months | Trust receipt, import financing, EFS Trade Loan, revolving credit | Months, up to one year |
Seasonal stock | One selling season | Short working capital or trade financing | A few months |
Business premises | Over decades | EFS Fixed Assets, property financing | Up to 15 years under EFS |
Seasonal stock has its own planning issues. Our guide to financing CNY stock before the rush covers the timing.
Why is getting the match right more important in 2026?
Costs and cash flow have both been under pressure this year. In an April 2026 survey by the Singapore Business Federation, two in three businesses said they had been hit by the Middle East conflict, 54% cited higher shipping and freight costs, and 41% of SMEs wanted working capital support. The OCBC SME Index for the second quarter of 2026 showed payments growing faster than collections in sectors such as healthcare, where payments rose 12.4% against collections of 7.3%.
When money goes out faster than it comes in, a mismatched loan hurts more. Spreading equipment over its working life and clearing stock financing as goods sell keeps monthly repayments in step with income.
What are your options for financing equipment?
Banks and finance companies offer equipment loans and hire purchase with published financing limits. As at 11 November 2026, their websites state:
Provider | Product | Financing | Maximum tenor |
|---|---|---|---|
DBS | Equipment financing | Up to 90% of the price or valuation, whichever is lower | Up to 5 years |
OCBC | Equipment and machinery financing | Up to 90% of the valuation or price | Up to 8 years |
UOB | Machinery and equipment | Up to 80% of the market valuation or price | Up to 5 years |
UOB | New commercial vehicles, hire purchase available | Up to 100% of the valuation or price | Up to 7 years |
Hong Leong Finance | Equipment hire purchase | Up to 90% for new and 80% for used equipment | Up to 5 years |
The financing percentage tells you the deposit you need: at 90% financing, you pay 10% upfront. Eligibility varies. OCBC, for example, asks for a company incorporated for at least two years and at least 30% owned by Singapore Citizens or PRs, and pays the supplier directly.
Ownership differs by structure:
Hire purchase. Under the Hire-Purchase Act, the financier owns the equipment until you have met the terms, usually the final payment.
Finance lease. Transfers the main risks and rewards of ownership to you, and for tax it is treated much like a purchase.
Operating lease. The leasing company keeps ownership, and you pay to use the equipment for a period.
Equipment can also make other borrowing easier. Our guide to why business loan applications get rejected notes that secured facilities reduce a bank's reliance on a guarantor.
What are your options for financing inventory?
Inventory is usually financed through trade facilities that are repaid as the goods are sold:
Trust receipt. A form of import financing: the bank pays your supplier, you hold the goods and the sale proceeds on trust for the bank, and you repay when the trust receipt falls due or when you collect the sale proceeds, whichever is earlier.
Letter of credit. Your bank guarantees payment to an overseas supplier, which can secure better terms on a large order.
Revolving credit or overdraft. A credit line you draw and repay repeatedly, paying interest only on the amount used.
EFS Trade Loan. A government-supported facility for inventory and stock financing, pre-delivery working capital and overseas working capital, with a one-year tenor.
If the stock is already sold and you are waiting for customers to pay, the need is different. Invoice financing releases cash against unpaid invoices, and a working capital loan covers broader running costs such as payroll and rent.
How does the Enterprise Financing Scheme help with equipment and stock?
The EFS is offered through participating banks and financial institutions, with Enterprise Singapore sharing part of each loan's risk. Three EFS loans are relevant:
EFS Fixed Assets | EFS Trade Loan | EFS Working Capital Loan | |
|---|---|---|---|
What it funds | Equipment, machinery, automation, factories and business premises, new or resale | Inventory and stock, pre-delivery working capital, overseas working capital, bank guarantees | Day-to-day operating cash flow |
Maximum tenor | 15 years | 1 year | 5 years |
Loan cap | Within $50 million per borrower group across all EFS loans | Within $50 million per borrower group across all EFS loans | $500,000 per borrower |
Government risk share | 50%, up to 70% for young enterprises | 50%, up to 70% for young enterprises | 70% from September 2026 to March 2027, normally 50% |
To qualify, a business must be registered with ACRA and operating in Singapore, have at least 30% local equity held by Singapore Citizens or PRs, and have group annual sales of no more than $500 million. Interest rates are set by each participating institution based on its own risk assessment.
Two points are easy to miss. First, the risk share protects the bank, not you: the borrower and guarantors still repay 100% of the loan. Second, the caps changed on 1 April 2026, when the separate per-borrower caps for Fixed Assets and Trade Loans were replaced by the combined $50 million borrower-group limit. Some older pages still show the previous caps. Our EFS-WCL guide covers the working capital loan in detail, and our guide to a director's personal guarantee explains what guaranteeing an SME loan means for your own credit.
Do grants and tax allowances change the maths?
They lower the final cost, but they do not reduce what you need to fund on day one.
EDGE. Enterprise Singapore's EDGE grant replaced PSG, EDG and MRA for new applications from 30 September 2026. It supports up to 70% of qualifying costs for SMEs on internationalisation and sustainability activities, and up to 50% for other activities, with up to $100,000 in grant support a year. It is paid as a reimbursement once the activity is complete and fully paid for.
Energy Efficiency Grant. Its base tier co-funds pre-approved energy-efficient equipment up to $30,000, and in April 2026 the government extended it to all sectors until 31 March 2028.
Capital allowances. IRAS lets businesses write off qualifying plant and machinery over three years, or in one year for computers and prescribed automation equipment. Low-value assets of up to $5,000 each can be written off in one year, up to $30,000 per year of assessment. On hire purchase, allowances are based on the deposit and principal actually paid in that year.
Check how these apply to your business with your accountant or tax adviser before you rely on them.
How do you compare equipment financing offers?
Compare the total cost and the fit, not just the headline rate. Rates are quoted in different ways: UOB illustrates a rate of 2.78% p.a. flat on its machinery page, while OCBC's calculator shows an effective interest rate (EIR) range of 3% to 6.5%. A flat rate quoted over several years can work out to close to double as an EIR, so convert before comparing. Our guide to business loan interest rates explains how.
Before you sign, check:
Financing percentage. How much deposit you need to find.
Tenor against useful life. The loan should end before the equipment needs replacing.
Ownership. Whether you own the asset now or at the end of the term.
Fees and early repayment. Processing fees and any penalty for paying off early.
Security and guarantees. What the bank holds, and whether directors must guarantee the loan.
Lendela's business loan matching lets you put one application in front of banks and financial institutions, rather than approaching each separately. Compare business loan offers before you commit to a supplier.
Frequently asked questions
Who owns the equipment under hire purchase in Singapore?
The financier owns it until you have met the terms of the agreement, which usually means making the final payment. Under the Hire-Purchase Act, ownership then passes to you. With an operating lease, by contrast, the leasing company keeps ownership throughout.
Can I use the Enterprise Financing Scheme to buy equipment?
Yes. The EFS Fixed Assets loan funds equipment, machinery, automation and business premises, new or resale, with a tenor of up to 15 years. It is offered through participating banks and financial institutions, and since 1 April 2026 it sits within a $50 million cap per borrower group across all EFS loans.
How long can I take to repay an equipment loan in Singapore?
Bank equipment financing typically runs up to 5 years at DBS, UOB and Hong Leong Finance, and up to 8 years at OCBC, as stated on their websites in November 2026. The EFS Fixed Assets loan allows up to 15 years. Choose a tenor that ends before the equipment needs replacing.
What financing can I use to buy stock for resale?
Trade financing suits stock that sells within months. Options include trust receipts, letters of credit, revolving credit and the EFS Trade Loan, which has a one-year tenor and covers inventory and stock financing. Repay as the goods are sold, so the financing does not outlast the stock.
Can a grant pay for my equipment upfront?
No. EDGE, which replaced PSG and EDG for new applications on 30 September 2026, is paid as a reimbursement after the activity is complete and fully paid for. You need to fund the full purchase first, through savings or financing, and claim the grant afterwards.
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Sources: Enterprise Singapore EFS Fixed Assets, Trade Loan and Working Capital pages, Business Refresh Package fact sheet (March 2026) and EDGE pages; Ministry of Finance Budget 2026 Annex B-1 and fact sheet of 29 July 2026; Hire-Purchase Act 1969; IRAS capital allowances guidance and e-Tax Guide on FRS 116 (30 January 2026); DBS, OCBC, UOB and Hong Leong Finance equipment financing pages; SBF press release of 22 April 2026; OCBC SME Index 2Q 2026. Accessed 11 November 2026. Rates and terms are indicative and personalised by each institution.
The Lendela Team
Lendela is a loan-matching platform that partners with 70+ banks and financial institutions. We aim to deliver a transparent, safe, and personalised loan-matching experience, empowering borrowers with confidence to choose what truly fits. Since launching in 2018, we’ve helped hundreds of thousands of Singaporeans make smarter, more informed financial decisions through clarity and control.
