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What Is Grab Finance and How is it Useful to You?

The Grab logo takes center stage as the app loads on a mobile phone, showing the wide reach of Grab Finance
The Grab logo takes center stage as the app loads on a mobile phone, showing the wide reach of Grab Finance

Grab has been synonymous with ride-hailing and food delivery services for a decade. But the tech giant has other ambitious goals. In 2018, Grab formed its financial services arm, Grab Financial Group, which provides payment, insurance, and financing services. Grab Financial Group then launched Grab Finance in 2020, providing funding to local SMEs. There are many differences between Grab Finance loans, bank loans, and loans from private money lenders in Singapore. This article will explore these differences, as well as help you figure out if Grab Finance loans are suitable for you

All you need to know about Grab Finance

Grab Finance provides two kinds of funding options for SMEs- the business loan and the merchant cash advance.

The same eligibility criteria apply to both the business loan and the merchant cash advance:

  • You must have a limited liability partnership or company;
  • It must be in operation for at least 6 months
  • It must be at least 30% owned by a Singapore citizen or PR, with fewer than 200 staff members.

In addition to the above requirements, sole proprietors are generally not eligible for Grab Finance loans.

You will also need the following documents for the application:

  • An Identification Card or passport
  • Business registration documents
  • Recent financial statements, and
  • Information about your director or head of operations

Here are some more details on both types of loans.

Business Loan Merchant Cash Advance
Can borrow up to $100,000 Can borrow up to $100,000
Loan tenure is up to 9 months Loan tenure is up to 6 months
Repayment is monthly Repayment is daily
No application or repayment fee No application or repayment fee
Includes a monthly interest of 0.9% 0% interest, but includes a one-time admin fee

Despite the similarities, there is one significant difference between the two types of loans. The business loan caters to those who need quick cash investments to use for anything from designing a website to paying employees.

On the other hand, the merchant cash advance provides access to short-term funding. This means that you can borrow an amount of up to $100,000, depending on your business, and repay it daily through automated deductions via your GrabPay wallet.

How does Grab Finance compare to similar options?

The biggest difference between Grab Finance funding and loans from money lending companies or banks in Singapore is that the former only allows owners of SMEs (less than 200 staff and in operation for at least 6 months) to apply. Being the sole owner of a company also makes you ineligible.

The next significant difference is in the interest rate; Grab Finance’s merchant cash advance has 0% interest (but a one-time fee starting from 5% is applicable), while the business loan is available at 0.9% interest per month. Some business loans from banks, such as those offered by OCBC, can be as low as 1.8% but go up to 12% per annum depending on the type of loan.

With a cap of $100,000 that can be borrowed over 6 months (merchant cash advance) or 9 months (business loan), Grab Finance’s loan limit is significantly lower than that of money lending companies in Singapore. For instance, R2D Credit allows any business owner to take business loans of up to $300,000 (subject to approval).

Here’s a nifty table to help you compare Grab Finance to other loan providers

Grab Finance Other loan providers
Only for SMEs Anybody can borrow, subject to the lender’s approval
An interest rate of 0% (merchant cash advance) or 0.9% (business loan) per month 1.8% – 12% per annum
Capped at $100,000 R2D / other licensed money lenders provide up to $300,000

Should you use Grab Finance?

Running your own business is a blessing that comes with a lot of challenges. When a need for a loan comes up, consider it carefully. Remember that the devil is in the details.

If you own an SME with other proprietors and fulfill requirements like having fewer than 200 staff members, Grab Finance is a viable option, provided that you are okay with their interest rates and are looking to borrow no more than $100,000.

However, if you don’t fulfill such requirements or are looking to borrow a higher amount, private money lenders in Singapore or banks may be a better option. The former, such as R2D Credit, has its own Grab/Gojek loan that caters to private hire drivers/riders in Singapore and provides attractive interest rates and remarkably flexible arrangements.

So contact us at R2D Credit now and start legal and fair financing for your company.

Disclaimer

The information provided on our website is for educational and informational purposes only and is not intended to be a substitute for legal or financial advice. While we try to ensure that information on this website is accurate, we do not warrant that the information will be free from error. We shall not be liable for any loss or damage that may arise from the use of this website.

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