10 Credible Banking and Financial Advisory Institutions in Singapore for Reliable Business Finance Solutions

How to Find Banking and Finance Services That’s Right for Your Company

Singapore's banking and finance sector has been relatively resilient amidst the COVID-19 pandemic, with most banks and financial institutions (FIs) reporting solid financial performance for 2020. However, the outlook for the global financial industry remains uncertain as the pandemic continues to rage on.

Although the retail banking and business lending sectors have been hit hard by the challenges of recent years, Singapore's financial industry is generally doing well. The business environment is strong, the banking sector is heavily regulated, and foreign investment has been growing rapidly in recent years.

As the international financial markets have expanded, so too has the number of financial firms based in Singapore. These companies offer everything from asset management and insurance to investment banking. Additionally, many multinational banks and finance organisations have made Singapore their regional headquarters.

What is Banking and Finance?

The banking sector is vital to the economy as it funds businesses to invest and grow. The finance sector, on the other hand, helps firms identify opportunities and manage risks. In general, banks prioritise accepting deposits and making loans while those in finance dedicate themselves to concepts like investments, risk management, and financial planning.

There are some key differences between banking and finance, even though they are closely related. For example, banks use the financial markets to raise money, but finance professionals turn to banks for their lending and risk management expertise.

Furthermore, there are three primary differences between banks and finance companies. Firstly, government agencies typically regulate banks while they don't regulate lending institutions. Secondly, banks accept deposits and make loans whereas finance companies generally don't perform either of those services. Lastly, attitude towards risk is usually more conservative amongst bankers than lenders.

There are numerous types of banking institutions that exist to safeguard the finances of people, businesses, and other organisations. Banks offer helpful money management services which assist individuals in saving, investing, and spending their money wisely.

Nowadays, it's often tough to tell where banking ends and finance begins. Lots of banks provide financial services, and many finance companies offer banking services too. Financial assistance encompasses things like making, investing, and managing money for both people and organisations---for instance, stock market trading or helping individuals save up for a rainy day. Therefore, if you're looking for the right institution for your business affairs, you first need to identify which particular service you require.

A more accurate term to cover both banks and FIs would be financial intermediaries. Financial intermediaries are banks, insurance companies, and investment firms that help businesses by providing capital, managing risk, making payments, and giving financial advice.

There are four main types of financial intermediaries:

• Banks provide loans, credit, and other services to businesses
• Insurance companies provide insurance products to businesses and provide means to protect themselves against risks
• Investment firms help businesses to raise capital and provide advice on portfolio management
• Government agencies provide financial services to businesses

Importance of Banking and Financial Services

The banking and finance industry is not only important for the economy, but it is also a significant employer, providing jobs for millions of people worldwide. In Singapore, the corporate finance sector contributed $5.6 billion in taxes, or about 2.4% of total tax revenue in 2016 alone.

Additionally, industry is important for the economy's development and society's welfare. It provides the funds for businesses to invest and grow and helps to identify opportunities and manage risks. It is also a significant employer, providing jobs for millions of people around the world.

For example, banks play an imperative role in both the financial system and the economy. As a key player in the financial system, banks appropriate funds from individuals who save money to those who need to borrow it effectively. They also offer specific monetary services that reduce the cost of obtaining information about saving and borrowing opportunities; these services help make the entire economy more proficient.

Digitising financial services has also made capital budgeting easier. Before, businesses would have to approach the financial services industry and go through a long and complicated process just to get a loan. Now, companies can use online platforms to raise funds from investors. This system is faster and more efficient because it allows businesses to tap into a wider pool of capital.

The wealth management industry services are essential for businesses to grow their operations, invest in new technologies, and hire new personnel. In addition, banks and FIs offer various services to help companies streamline their processes, reduce costs, and improve their bottom line.

For example, banks can help businesses by giving loans for company expansions or other capital requirements. Also, banks provide lines of credit businesses owners can use for daily expenses. Furthermore, consumer banking also provides merchant services to allow businesses to accept credits and electronic payments. These services not only help enterprises save money on transaction fees but make it more convenient for customers to pay too.

Not only does utilising banking and financial services have direct money-making benefits, but they can also assist businesses by enhancing productivity and decreasing operational spending. For example, online banking and bill pay to diminish the need to send out invoices physically or process payments without automation--which saves companies time and money. Automated teller machines (ATMs) help reduce transaction costs for businesses that might otherwise spend more hiring personnel specifically to handle these types of transactions.

Types of Banks and Financial Institutions

The banking industry is diverse, with different types of institutions catering to specific customers and offering unique services. They may also use different techniques to generate revenue and make profits, which are all regulated by the Monetary Authority of Singapore (MAS).

• Payments

Payment processors are companies that work in the background to provide payment processing services to merchants. They are divided into the following categories:

• Standard payment institutions that handle account issuance, merchant acquisition, money transfer, digital payment token services, international money transfer, money-changing, and e-money issuance
• Major payment institutions with higher thresholds than standard payment institutions
• Credit and charge card issuing companies
• Money-changing companies
• Designated payment system operators and payment system settlement institutions

• Banking

Banks are divided into:

• Full banks engage in universal banking activities, like deposit taking, cheque services, and lending
• Wholesale banks are just like full banks except they don't offer retail banking services in Singapore dollars
• Merchant banks provide the following services: lending, private banking, securities dealing and underwriting, asset management, and investment banking
• The Qualifying Full Bank scheme is designed specifically for foreign banks
• Finance companies that provide services such as deposit taking and lending to individuals, corporations, and SMEs

• Capital Markets

Singapore law states that the following types of businesses belong to capital markets institutions.

• Capital markets service provider
• Collective Investment Schemes (CIS) Trustees which are authorised to offer to retail investors and constituted as a unit trust
• Fund management company which raises and manages investors’ funds
• Trust company that provides trust services such as the creation of a trust, acting as a trustee, or providing trust administration services
• Exchange or market operators, which are entities operating an organised market for securities, derivatives contracts, or units in a CIS
• Clearing house which offers clearing or settlement services
• Trade repository which offers trade reporting services
• Benchmark administrator which is an entity administering a designated group of securities

• Financial Advisory

A Singapore company must hold a Financial Adviser (FA) licence to conduct financial advisory services regulated under the Financial Advisers Act unless exempted. The financial advisory covers any financial advisory service, unless exempt. Typically, the exemption is provided to institutions that are covered by a more stringent license than the FA license.

The following businesses are exempted from holding a financial adviser’s licence:

• A bank licensed under the Banking Act
• An insurance company licensed under the Insurance Act
• A holder of a CMS licence
• A finance company that has been granted an exemption from the Finance Companies Act to provide financial advisory services
• Any financial advisory service that is part of a recognised market operator's approved exchanges

• Insurance

The insurance category covers the following types of businesses:

• Direct insurers (Life) which are companies that write life policies as well as long-term accident and health policies
• Direct insurers (General)which are companies that write all insurance business other than life policies and long-term accident and health policies
• Direct insurers (Composite) are firms that write both life and general insurance business
• Reinsurers or companies that write life or general reinsurance business
• Captive insurers are companies that write insurance business which consists principally of risks of its related corporations
• Company established under Lloyd's Asia Scheme
• Approved Marine, Aviation, and Transit (MAT) insurers that do not have a physical presence in Singapore
• Authorised reinsurers do not have a physical presence in Singapore
• General Insurance Agents arrange contracts of insurance for direct general insurers

All of the activities mentioned above are regulated by MAS and require a special license.

Benefits of Financial Advisory Services for Businesses

Financial advisory services can help you find solutions to your business' weaknesses, allow you to identify strengths, and open up potential growth opportunities.

• Develop a Holistic Financial Plan

Businesses have been suffering ever since the pandemic began, and many business owners are struggling to keep up.

It can be difficult managing your daily finances while also trying to balance your future needs with what you currently owe - even during good times. With financial advice, though, you’ll gain a better understanding of your overall financial situation.

Many benefits come with professional financial advice, including assistance with different areas of your life such as business, personal finance, and estate planning. Being proactive about your finances helps you reach long-term goals.

Advisors not only analyse your business, but can also offer risk management, insurance planning, and even business tax help. They excel in giving you a broader perspective of crucial decisions and aid you in seeing all the possible outcomes. Furthermore, financial services businesses are specially trained in calculating assets under management.

• Prepare the Company for Growth

When planning future developments for your business, it's easy to let emotions direct you. But this could lead to unfavorable outcomes because some operations are delicate. This is where an investment advisor comes in. They can help ensure you make the best choices for your plans and investments by keeping things objective.

There are three main components you need for a successful business expansion: an objective, a plan, and the tactics to make it happen. Utilising clarity from financial professionals is key to expanding your enterprise successfully. This strategy helps stabilise and grow your business while ensuring that your vision is focused in the right direction.

A financial advisor can help your business reach its potential by offering assistance on relevant issues and assessing your ability to achieve business goals. This type of advice can also help you solve problems in the market or find opportunities in a crowded marketplace.

• Plan Business and Personal Finances

Business owners traditionally establish companies to improve their financial stability. However, the time-consuming process of developing a business can often cause entrepreneurs to lose focus on their finances.

Once you select a financial advisor, they will help you decide if your business and personal finances are in good condition. Furthermore, they can assist with developing a plan to get them both for investments, taxes, and cash flow purposes.

Not only will a financial advisor provide you with bookkeeping services and prepare financial reports, but they will also do much more. Everyone should have a personal and professional financial advisor if they want to be successful in the long run. Some individuals avoid hiring an advisor because they believe it costs too much money when it is the opposite! An advisor will not only help your business expand---they will also save you time and money.

• Streamline Business Operations

Having an advisor will help you manage your business more effectively by reducing time wastage, fine-tuning your strategies, optimising your employees, and making decisions that benefit your business.

An experienced financial expert can help you feel more confident about exploring new business environments and concentrating on vital aspects of your business. The advisor helps by:

• Organising your day-to-day operations
• Revisiting your business plan
• Clearly defining business goals and objectives
• Reaching out to existing clients
• Reevaluating your pricing/service model
• Identifying the areas you want to improve
• Improving your marketing efforts
• Measuring performance

Overview of Banking Regulations in Singapore

The MAS is the central bank of Singapore and regulates FIs in the country. The MAS has four main objectives: to maintain price stability, promote sustained economic growth, ensure a sound and efficient financial system, and have more confidence in the financial system.

MAS achieves these objectives by working with professional bodies, businesses, and the public. MAS also regulates financial markets and provides banking services to the government.

• What are the powers of MAS?

The MAS has a regulatory framework that includes issuing licenses, inspecting financial industry members, and imposing sanctions on them.

The MAS also has the power to intervene in the affairs of banks and lenders. This is known as the " powers of direction". The MAS can use this power to protect the interests of depositors, creditors, and investors.

• What are the requirements for banks in Singapore?

The Banking Act regulates banking in Singapore. The act sets out the requirements for financial technologies, such as banks, to operate in Singapore. It also gives the MAS the powers to regulate financial instruments and to take action against them if they breach the act.

To operate in Singapore, banks must be registered with the MAS. They must also have a physical presence in Singapore, maintain a minimum capital requirement, and submit monthly audited financial statements to the MAS.

Banks must also comply with prudential requirements, such as maintaining a certain level of liquidity and capital. The MAS may impose additional requirements on banks if it considers them necessary.

How to Open a Business Bank Account

When you're ready to begin handling money for your business, open a business bank account; this will help keep you legally compliant and protected, as well as offer advantages to your customers and employees.

Incorporating your company with Accounting and Corporate Regulatory Authority (ACRA) is the first step to take if you want a corporate bank account in Singapore. After your company registration is complete, you can open an account with any of the major banks. The process is practically identical to opening a personal bank account---you will just need to submit some additional information like your name, address, and contact details.

To open your account, you may be required to provide additional documentation such as your Certificate of Incorporation. Generally, the following is needed to open a corporate bank account in Singapore:

• board of directors' resolution
• certificate of incorporation
• company’s business profile
• Memorandum and Articles of Association
• copies of passports or Singapore national identification cards of all the directors
• proof of residential addresses of the directors and owners

Some banks require that the account signatories and directors be physically present for the signing of official documentation at the time of account opening, while others may accept documents that are signed in person at one of their overseas branches or in front of a notary. Nevertheless, all banks comply with stringent laws and regulations by carrying out comprehensive checks and investigations on new potential clients before opening an account.

Overview of Corporate Loans

Corporate loans are a type of financing that businesses can use for business expenses. In Singapore, banks and other wealth management institutions typically provide these types of loans. There are a variety of business loans available, each designed for specific needs or businesses. The most common types are:

• Business Loan

The average business loan is unsecured, which means you're not offering any of your assets as insurance. You then decide on a repayment term that can be up to 5 years long. All major banks offer this same service to local businesses, but certain requirements must first be met; such as how many years your company has been established and how much profit it makes annually.

• SME Working Capital Loan

The SME Working Capital Loan is a business loan that's offered to local SMEs by the Singapore government, in partnership with banks. This financing program provides up to $1 million per borrower, which must be repaid within 1 to 5 years. To be eligible for this loan, businesses must be registered in Singapore and at least 30% owned by citizens or permanent residents of Singapore.

• Temporary Bridging Loan

The government is giving out more loans to help businesses that are struggling because of COVID-19. If your company is at least 30% owned by locals and registered in Singapore, you can apply for a loan of up to $5 million. You will have up to 5 years to repay the loan.

• Startup Business Loan

A startup business loan is a miniature version of the regular business loan, usually offering a smaller amount, for example up to $100,000. Because you only need to be in operation for a handful of months and don't require an extensive financial history, it's much easier to get approved for a startup business loan.

• Requirements to Apply For A SME Business Loan

The bank will need the following documents from you to approve your SME business loan application:

• NRIC of sole proprietors, partners, principals, and directors
• GST statements for the past 12 months
• Operating bank current account statements for the past 6 month
• Required business banking facility forms issued by the bank (to be filled up)
• Completed Enterprise Singapore Enterprise Financing Scheme application form (if applicable)
• Income Tax Notice of Assessment for sole proprietors or partners
• Board of directors' resolution
• Constitutional documents for your company, such as memorandum or articles of association
• Any professional certificate (if applicable) related to the establishment of the entity, identity, and proof of business address

How to Get a Commercial Property Loan

For most businesses, renting a commercial property is the best option. However, for a smaller group of businesses, buying a commercial property can make sense.

Most banks will require that your business be incorporated in the same country for 12 to 24 months before you'll be eligible for a commercial property loan. To qualify, businesses must also have at least 30% ownership by Singaporeans/PRs and a turnover of $20 million or less. If your company has fewer local owners or makes more than $20 million, you can still take out a loan from the bank---just know that it won't fall under SME banking terms.

A typical bank in Singapore will lend you 80% to 90% of the purchase price or valuation of your property. When taking out a commercial property loan as a business, there are no Total Debt Servicing Ratio requirements like there would be for an individual. However, your credit standing can impact how much loan banks may be willing to extend to you.

Consider taking out a loan to lower your out-of-pocket costs when buying commercial property. Many banks in Singapore offer repayment periods of 25 to 30 years for commercial property loans. Weigh out the pros and cons of taking a long-term commercial property loan. You will be spending more on interest if you do choose to lengthen your loan tenure. On the other hand, by gradually gaining equity ownership in your commercial space through timely repayments, you could opt for cash-out refinancing and extend your repayment window past 30 years.

Most banks let you apply for a commercial property loan online. If you have your ACRA or MyInfo Business login details, it'll make the process go more smoothly.

You should already have shortlisted the property you want to purchase when submitting your application. To speed up getting a conditional offer, have the information for the desired property on hand:

• Address
• floor size
• valuation or property price

In addition to the usual documents, you should also have the following financial records for the last two years when applying for a commercial property loan from a different bank than your business banking:

• your financial statements
• bank statements
• income tax Notices of Assessment of guarantor(s)
• NRIC of guarantor(s)

How to Look for Banking and Financial Services in Singapore

Before signing up with any banking or financial service in Singapore, do your research on the following so you know what you're getting yourself into:

• Licenses and Permits

There are several licensing and permit requirements that banks and FIs need to comply with. The MAS regulates FIs in the banking, capital markets, insurance, and payments sectors, including more than 150 deposit-taking institutions and finance companies.

Check for the different specific regulations and licensing requirements sectors such as capital markets, banking, insurance, trust, financial advisory, and payments. The regulations cover diverse topics, such as risk management, consumer finance, anti-money laundering, treasury, governance, resolution, conduct, regulatory submissions, legal, prudential, and supervisory, and licensing / authorisation and registration.

• Types Of Commercial Property Loan Available

You can choose between a fixed or flexible commercial property loan, depending on your needs. However, note that you will be locked in for 2 to 3 years regardless of which type of loan you choose. If you need to sell or prepay your property during this time frame, there may be penalty fees involved.

Fixed packages offer more certainty for businesses, with a known cash outflow for the next 2 to 3 years. Variable packages tend to start slightly cheaper but can vary depending on how interest rates fluctuate.

Commercial property loans can be pegged to interest rate benchmarks such as the internal board rates. To learn more, you need to contact the banks separately for a quote.

• Quality and Range of Banking Support

Make sure that the customer service hotline is available 24 hours a day, and that there is also a toll-free number. Also, see if you can view your e-statement online, as well as transaction e-advice.

When opening a bank account, be sure to check for fees associated with different services, as they can vary significantly from one bank to another. These services may include telegraphic transfer, foreign currency remittance, and inter-bank fund transfer. Additionally, it's important to see if there are any preferential interest rates offered for exchanging foreign currencies or making deposits into the account.

Please keep in mind that price is not the end-all, be-all when choosing a bank. It's also important to make sure you're getting the right amount of capital, business understanding, and customer service from your potential FI. Several factors play into determining which bank is right for you, such as pricing and fees, the initial deposit required, and the minimum balance needed to keep the account active.

• Reputation and Niche Expertise

To ensure the safety of your money, it's best to pick a bank that has high creditworthiness, confidentiality standards, reliable services, and known history. However, even if everything looks good on paper for the corporate account you're considering, you should still talk to people in the same business as you about their experience with that particular bank.

Keep in mind that the bank you select should have experience with businesses like yours. Every industry has unique standards and obstacles. If your bank is experienced in working with companies within your industry, they can offer helpful tips and direction. You may also be able to find banks that specialise depending on other factors such as being woman-owned or small-scale businesses.

Depending on whether you want services focused on asset and wealth management or you prefer a commercial focus with access to services such as international trade, cash management, payment, and financing will determine what type of bank is best for you. If private banking better suits your needs, then that's the route you should take. However, an international commercial bank may be more your speed if that's what you're looking for.

• Specialist and Channel Services

Before you choose a bank, think about whether it offers integrated savings and investment accounts, foreign currency accounts, and consolidated online bank statements. Other things to consider are the ATM network, branches coverage both local and worldwide, daily transaction limit, and whether business debit or credit cards are available as these services can differ significantly from one bank to another.

In addition, evaluate whether the bank offers other services and products like foreign exchange, asset finance, and wealth management services. These may include insurance, investment, and superannuation.

• Fully-Automated and Online Services

With almost all banks offering online checking, it can be hard to choose one that will suit your needs. Before making a decision, inquire about the bank's cash-management tools. Many of these services are free for small businesses allows users to send invoices, collect payments, scan checks for online deposits, and cut payroll checks. Also, look for industry-specific features like enhanced merchant services that can help you accelerate your cash flow or offer advice on avoiding debt altogether.

To ensure your safety while banking online, check that the bank's internet security is foolproof and equipped to protect against unauthorised access. Some banks offer an additional security measure in the form of a device given to the user, in addition to an ID and password for logging into one's account. Other banks require a signed receipt acknowledgment of internet banking materials before allowing registration for an online account.

• Additional Costs for Loans

When acquiring a commercial property, you will have to pay some fees. They might be things like agent commissions and finding the right commercial spot. It is also possible that there are legal or valuation fees as well. The bank you go with for your loan may give you a subsidy on those sorts of fees though.

Please note that commercial property loans typically come with a higher interest rate than residential property loans. If you choose to sell the access or pay it off before the two- to three-year time period, you are likely to incur a fee of 1.5%.

After buying a property, you will still have to pay annual taxes (10% of the value of your property) as well as a maintenance fee. If you rent out your property, you may also have to pay income tax on the rental income.

Banking and finance institutions provide several benefits to the business world, including access to capital, credit facilities, and working capital loans. By offering lines of credit, banks allow businesses to borrow money as needed for short-term or long-term projects. On the other hand, financial advisory services help companies make sound business decision-making that can lead to increased profits.  

To find the best banking and financial services in Singapore, it is essential to understand the benefits that these institutions offer businesses. 

Secure the future of your business now with one of our recommended banking and finance companies in Singapore.