What is commercial banking?
Commercial banking provides founders and businesses with banking products and services. This includes business banking accounts, commercial loans, trade finance, and FX. These products are different from the personal banking options.
For the 300,000-plus founders operating in Singapore, a market where SMEs make up 99% of all businesses and contribute nearly 50% of the country's GDP, the right commercial banking partner is more than a place to keep your money. It's the infrastructure behind your cash flow, your cross-border payments, and your access to government-backed growth capital.
Commercial banking explained: How does commercial banking work
Commercial banks offer banking and financing products and services to businesses. These banks collect deposits from one founder and then lend it as capital to another founder at a higher interest rate. The difference between the interest they pay depositors and the interest they charge borrowers is their revenue, along with other service fees such as FX margins, trade finance charges, and commercial credit card interest.
The Monetary Authority of Singapore (MAS) controls all commercial banks operating in the country. It sets the requirements for capital adequacy, liquidity standards, and banking conduct guidelines that apply to both local and foreign banks operating within the country.
Here’s how different services work with commercial banks:
Deposits and liquidity
When a founder deposits funds into a commercial bank account, the bank extends part of it as a capital loan to other businesses. Deposits held with an MAS-regulated bank are protected under the Singapore Deposit Insurance Corporation (SDIC) scheme. SDIC covers up to SGD $100,000 per depositor per scheme.
Commercial lending and credit assessment
Commercial lending banks assess your creditworthiness when you apply for a business loan or line of credit. The approval is based on your business revenue records, financial statements, monthly or annual cash flow, and collateral. It checks if your business qualifies for the Enterprise Financing Scheme (EFS). If it does, the government will share some part of the loan, allowing you faster approval.
Payments and settlements
Commercial banks in Singapore offer both domestic and international payment infrastructure, with fintech platforms offering additional services for founders. This includes fast and secure transfers between banks and PayNow, tied to a Unique Entity Number (UEN) or mobile numbers, for real-time payments. International payments happen through the SWIFT network of banks.
Relationship banking model
Unlike retail banking, where users are self-served through a mobile banking app, commercial financing options offer you a dedicated Relationship Manager (RM) for established business accounts. The RM is the primary point of contact for the founders for credit applications, product recommendations, and time-sensitive requests.
Trade finance and global connectivity
For founders with global operations, commercial banks offer a suite of trade finance tools that go well beyond simple wire transfers.
Letters of Credit (LCs) ensure payment to foreign suppliers once they meet the agreed shipment conditions. This is essential for building trust with new international vendors who don't know your business yet. Export and import financing bridges the cash flow gap in international trade cycles. FX hedging tools let you lock in exchange rates in advance, protecting your margins against currency swings on major corridors like SGD/USD or SGD/CNY.
For Singapore businesses that are at the centre of ASEAN trade flows, these tools make global operations financially viable.
The differences: commercial banking vs. other banking tiers
With different types of banking services, a lot of services and terms overlap with commercial banking. It is different from other financial institutions in various aspects.
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Many commercial banks like DBS and OCBC offer retail, corporate, and wholesale banking services under different divisions. For startups, fintech platforms like Aspire offer services and perks beyond traditional commercial banking, like smoother accounting integrations, corporate cards with spend control, and uncapped cashback on every eligible spend.
Benefits of commercial banking for founders
Commercial bank account opening provides founders multiple advantages, including:
Scalable credit line
Commercial banks assess your business on its own financial revenue, cash flow, and operating history. That means the credit available will also change as your revenue increases. A working capital line today can become a term loan for equipment next year, and a trade finance facility when you're ready to move cross-border.
Government-backed financing
Commercial banks are the only gateway to Enterprise Singapore's Enterprise Financing Scheme. Because EnterpriseSG absorbs a portion of the bank's credit risk, you can access higher loan amounts at better rates than you'd get on purely commercial terms.
Multi-currency accounts
If you're paying suppliers in China, invoicing clients in the US, or running operations across ASEAN, every unnecessary conversion eats into your margins. A commercial multi-currency account lets you hold, send, and receive in SGD, USD, EUR, CNY, and more, all from one place.
Cross-border payments
Commercial banks in Singapore are connected to SWIFT and regional payment networks, with established correspondent banking relationships across ASEAN, China, and Europe. For founders managing international supply chains, that offers predictable settlement times, competitive FX spreads, and trade finance tools, like letters of credit, that give overseas suppliers the confidence to do business with you.
Growing financial records
A dedicated commercial account keeps business and personal finances cleanly separated from day one. When you're filing taxes, going through an audit, or applying for your next credit facility, clean books record only business trails.
Less time on admin
Modern commercial banks and neobanks integrate directly with Xero, QuickBooks, and NetSuite. Transactions sync automatically, reconciliation happens in near real-time, and your finance team gets hours back every month-end close.
Relationship Manager who knows your business
A dedicated person who understands your industry, your growth trajectory, and what you need can move quickly when a credit decision or trade finance request can't wait.
State of commercial banking in Singapore
Understanding the landscape of commercial banking in Singapore means knowing who the players are and what they're useful for.
The local banking ecosystem
Singapore's commercial banking market broadly breaks down into 3 categories:
- Local established banks - DBS, OCBC, UOB: The big 3 dominate in terms of reach, product depth, and government financing access. They have dedicated SME banking teams, physical relationship managers, and the longest track records with Enterprise Singapore schemes. DBS in particular has invested heavily in digital banking infrastructure for businesses, with APIs that integrate directly with accounting software.
- Foreign banks - Standard Chartered, HSBC, Maybank, Citibank: These are particularly strong for founders with significant cross-border operations, especially in markets where these banks have deep local networks. For example, HSBC for UK and Hong Kong flows, Maybank for Malaysia and Southeast Asia, or Standard Chartered for South and Southeast Asia.
- Digital banks and neobanks - ANEXT, Green Link Digital Bank: Purpose-built for the needs of modern founders, these platforms for online commercial banking offer faster onboarding, leaner fee structures, real-time FX, and seamless integrations with accounting tools like Xero and QuickBooks. They're particularly strong for founders who are digital-first, operate across borders, and want full visibility over their finances without legacy banking friction.
Tapping into government-assisted financing
Here's the part many founders don't fully realise: commercial banks in Singapore aren't just lenders. They're the gatekeepers to Enterprise Singapore's government-backed financing programs.
The Enterprise Financing Scheme (EFS) is a government-backed financing program in Singapore, launched by Enterprise Singapore, that consolidates multiple SME loan schemes into one umbrella. The key advantage is risk-sharing: when you apply for an EFS-backed loan, Enterprise Singapore absorbs a portion of the bank's credit risk, which means you can often access higher loan amounts at better interest rates than you'd receive on pure commercial terms.
The major sub-schemes worth knowing:
- EFS SME Working Capital Loan - The EFS-WCL helps SMEs finance their operational cash flow needs. With effect from 1 April 2024, the maximum loan quantum for the EFS SME Working Capital Loan was enhanced to SGD $500,000 permanently.
- EFS Trade Loan - Designed for companies engaged in international or domestic trade, this sub-scheme supports trade-related financing instruments such as letters of credit, trust receipts, bill financing, and invoice financing, with a maximum loan quantum of SGD $10 million per borrower following Budget 2025, and a government risk share of 50%.
- EFS Fixed Assets Loan - For Singapore enterprises to finance their investments in domestic and overseas fixed assets, including the purchase of equipment and machines for automation and upgrading, and the purchase or construction of government- and commercial-built factories and business premises. The maximum loan quantum here is SGD $50 million, with up to 15 years' tenure for property.
As announced by MOF on 29 July 2026, an enhanced 70% risk share takes effect from 1 September 2026 to 31 March 2027 for eligible SMEs. If you're considering a growth loan in the near term, the timing works in your favour.
The key practical point: you don't apply through Enterprise Singapore directly. You approach a Participating Financial Institution (PFI), which is your commercial bank. It submits the application on your behalf after conducting its own credit assessment. PFIs include most major banks operating in Singapore, including DBS, OCBC, UOB, Maybank, Standard Chartered, CIMB, and others.
How to choose the right commercial bank for your startup
Not every bank fits every business. Here's a practical checklist for Singapore founders evaluating their options:
- Digital interface and accounting integrations: Does the bank's platform connect directly with Xero, QuickBooks, or your ERP of choice? Automated reconciliation reduces how much time your AP spends on invoices. Look for banks or neobanks with open APIs and real-time transaction sync; it directly reduces your month-end close time.
- Cross-border fee structure: If you're regularly paying overseas suppliers or receiving payments from international customers, FX fees compound fast. Ask for the specific spread on your primary trade corridors, for example SGD/USD, SGD/CNH, SGD/EUR, and compare across at least 2 to 3 providers before committing.
- Industry appetite: Banks have risk preferences, and they shape their lending decisions accordingly. Some are more comfortable with tech startups, others lean toward manufacturing, logistics, or F&B. Understanding a bank's industry orientation before applying for credit saves you a lot of time.
- Relationship management model: Will you have a dedicated Relationship Manager (RM) who knows your business? For founders who need responsive credit decisions or trade finance support during a fast-moving supplier negotiation, having a named RM is genuinely valuable.
- EFS participation: If you're considering government-backed financing, confirm upfront that your chosen bank is an active Participating Financial Institution under the Enterprise Financing Scheme. Not all digital-only banks have this status yet.
- Regulatory status and deposit protection: Full commercial banks licensed by MAS provide deposit protection of up to SGD $100,000 per depositor per scheme member under the SDIC scheme. Before you move significant operating funds to any platform or bank, check its MAS licence type and whether SDIC coverage applies to it.
- Approval workflows and spend governance: The complexity of who spends what and how much increases as the team scales. Look for banks and platforms that allow you to set role-based access and approval flows for payments.
Conclusion
Moving to a commercial banking setup is a sign that your business has grown from a small enterprise that worked on personal finance into something that needs real financial infrastructure.
Singapore’s EFS ecosystem, a sophisticated digital banking market, and a global trade position make multi-currency operations the norm rather than the exception. But the right setup depends entirely on where you are and where you're going.
A practical next step is to audit your current banking costs. Add up your monthly FX fees, transfer charges, and any manual admin time your team spends on reconciliation. Then benchmark that against what a commercial bank or a modern fintech platform with commercial banking integrations would cost you at your current transaction volume. If the gap is larger than you expect, then your business is ready to leap into commercial banking.
Fintech platforms like Aspire connect with legacy banks to offer services beyond commercial banking, providing better control over spending, higher earnings on idle cash, expense management, and 1.2%* unlimited cashback on every card spend.
FAQs
Do I need a commercial banking account if I already have a business account?
Not necessarily, but it depends on your complexity. A standard business account from a retail bank may handle basic needs. Once you're managing payroll for a team, paying overseas suppliers, applying for growth loans, or operating in multiple currencies, a dedicated commercial banking setup gives you the tools to do this efficiently. Many founders make the switch when they hit the SGD $500,000–$1 million annual revenue mark.
How do I apply for an Enterprise Financing Scheme loan in Singapore?
You apply through a Participating Financial Institution, your commercial bank. Prepare your latest 2 years of financial statements, your ACRA BizFile+ printout, and a summary of the financing purpose. The bank conducts its own credit assessment, then submits to Enterprise Singapore for risk-share approval. Interest rates are set commercially by each bank, so it's worth comparing offers from 2 to 3 PFIs.
What's the difference between commercial banking and investment banking?
Commercial banking takes deposits and lends money directly. Investment banking helps companies raise capital through equity markets (IPOs, secondary offerings) or debt markets, and advises on mergers and acquisitions. Most growing startups and SMEs work exclusively with commercial banks. Investment banking becomes relevant at a much later stage, typically when you're pursuing a significant capital raise or exit.
Which Singapore bank is best for startups?
It depends on your business model, transaction volumes, and cross-border footprint. DBS and OCBC both have strong SME and startup programmes. Digital-first founders often start with a fintech platform like Aspire for its seamless integrations and lower fee structure, then layer in a traditional commercial bank relationship for credit facilities and EFS access as the business scales.
Can a foreign-owned business in Singapore access commercial banking and EFS loans?
Yes, to commercial banking. For EFS loans, there's a key eligibility criterion: your company must have at least 30% local equity held directly or indirectly by Singaporean citizens or Permanent Residents, with a group annual sales turnover not exceeding SGD $500 million. The SME Working Capital sub-scheme additionally requires a group revenue of up to SGD $100 million or a maximum of 200 employees.
What's the minimum revenue or company size to open a commercial bank account in Singapore?
Most commercial banks in Singapore will open a business account for any registered company. However, access to dedicated SME banking relationships, credit facilities, and government-backed financing typically becomes more accessible once you have at least 12 to 24 months of operating history and demonstrable revenue. Digital-first neobanks often have lighter onboarding requirements and are a practical starting point for early-stage founders.
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