How many lenders are there in Singapore?

Do you know how many lenders are there in Singapore?

If you don't, don't worry. Many RMs that we spoke to don't know too! In fact, we recently did a poll and only 20% of bankers & RMs got it correct. That is because unlike banks and licensed moneylenders which fall under the Banking Act and Moneylender Act - which more people in finance are familiar with - there is another major category of lenders which are the excluded moneylenders and other categories that many non-bank RMs do not even know they belong to.

Many of them are salespersons and may not have knowledge beyond what their bank or Financial institute trains them on. For example, trade finance is a category of loans and not a loan type but many RMs get it wrong. So check out our glossary to learn more about the various loan types after this blog!

Similar to how a sister company can lend money to another company, or a director of a company can lend money to the company and vice versa without being a moneylender or a bank, an "excluded moneylender" includes lenders that lend money solely to corporations, limited liability partnerships, accredited investors etc. 

Counting exactly how many lenders there are in Singapore can be rather tricky as most of them do not need a separate license. For instance, do you count pawnbrokers under the Pawnbrokers Act, credit societies under the Co‑operative Societies Act and so on? However, credit societies serve only members and are therefore not available to the public, while there are banks that exist only to serve customers from their originating countries that have a presence here and the general public cannot access them. (Also, do you need to break down between digital and neo bank?)

We have thus prepared a simple chart which should be applicable for most readers, to share with you the types of lenders there are first (I tried to break it down further with the above, but my boss says it is very ugly and complicated).

One way of looking at it is breaking them down into where they can get their funds from. Another is who they can lend to. As such, you can put them into 4 main categories.

Finance companies are similar to banks in many ways but they offer savings or checking accounts less often or offer lesser loan types.

Moneylenders refer to those with a moneylender license conforming to the Moneylender Act, not those loan sharks or unlicensed moneylenders. Exempted moneylenders are excluded moneylenders that have gained permission to lend to sole props etc. which are not considered corporations.

Fintech lenders are not typically considered as a lender category due to how they operate their business - using technology to supposedly speed up the credit process or reduce operational costs etc. - and they can be a moneylender or an excluded moneylender depending on who they lend to. But with more and more lenders branding themselves as a fintech company, we have in this opinion piece, decided to include them as a "category".

In many countries, factorers (invoice financing etc.) are not even considered as lending money to a business, but consider buying an invoice instead (at a discount, thus also known as invoice discounting - read our glossary for more). 

Singapore is a finance hub and the authorities understand the importance of credit being available to businesses. Because excluded moneylenders are not regulated - apart from being required to be a properly registered company such as a private limited company in Singapore, with no additional licenses required and any authority maintaining a registry on them - this is why it is so hard to know exactly how many lenders there are in Singapore due to this category alone. Many excluded moneylenders are not even aware of the existence of some excluded moneylenders. and we have actually connected a number of excluded moneylenders to one another as they sometimes wish to work with other lenders.

In total, we believe there are at least 80 excluded moneylenders(including factorers) and around 2 dozen banks and finance companies with close to 200 moneylenders (of which around half offer some business loans too) that the majority of the public can access. 

Does that mean when you are looking for the best loan, you need to apply with hundreds of financial institutions? Of course not. Your loan profile and the loan type you are looking for will greatly shrink the number of lenders you should speak to. e.g if you are a consumer who is not a sole prop, you will only have 3 categories of lenders you can speak to. That is how most "comparison websites" work actually. But you would still have to, after filtering down to a more manageable size - apply one by one, unlike using us.

Lenders in the same categories tend to price loan offers similarly too, so you can save time by comparing within the same category first and failing which, move "down" the category ladder. Due to where they get their funds from:  say a bank gives their depositors 0.1% p.a interest which will be their cost of funds, whereas a non-bank lender gives their investors 3% if both wish to make an average of 1% from that loan type, they will need to charge 1.1% and 4% respectively. So if you qualify for a bank loan, comparing with lenders from another category might not be too useful.

If you are a business, there will be more categories. However, many of them specialise in certain loan types or risk profiles. Risk profiles are however a little harder to define and most lenders do not specify them on their websites. Some lenders lend to businesses that are 6 months old and above & some 36 months is the minimum. But a lender that is willing to lend to companies that are 6 months old, may suddenly not, if the borrower is from certain industries, borrowing above a certain amount or has below a certain amount of local shareholding. 

Apart from the fact their parameters are constantly changing based on market conditions, lenders also do not want to spell out exactly what they are looking for as this may give fraudsters or the competition insights into their strategies. So read review websites with a pinch of salt too, as they compile their information from generic information they can find or from their personal experience which may not apply to you.

The good thing is when using FindTheLoan.com, you do not have to figure all these out. Simply choose the loan type you are looking for, upload the necessary info only once, and send your application to multiple lenders and let them directly tell you exactly how much they can lend you, at what rate and for how long.

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