SME Working Capital Loan in Singapore

Up to $300,000

5 Year Repayment Period

Interest rates from 3.5% - 3.75% per annum

Working Capital Loan to Grow Your Business

Under this program, Enterprise Singapore will facilitate the disbursement of unsecured working capital loans for SMEs by standing in as a guarantor for 50% of the loan default risk. SMEs may apply for up to S$300,000 with a 5-year repayment period.

To qualify, SMEs must be registered and operating in Singapore. SMEs must have a minimum of 30% local shareholding and a group annual sales turnover of not more than S$100 million or group employment size of not more than 200.

What is Working Capital Loan?

Working capital refers to the cash that a business utilizes for daily operations, and the general running matters of the business. As the saying goes , “Cash flow is king”. What happens when a company does not have enough money to run its daily operations?

The working capital loan in Singapore is a business funding facility that provides SMEs with additional funds for daily operations. Business owners usually take up working capital loans in challenging times, or when they want to expand the business.

How does the Working Capital Loan work?

A working capital loan in Singapore generally has a term of up to 5 years. The main objective of the working capital loan is to provide businesses with cash flow to sustain daily operations. With a tenure of up to 5 years, working capital loans are excellent for long-term expansion plans that require time to be successfully executed. The SPRING SME Working Capital Loan scheme was initiated to help companies ease daily operational costs for an extended period.

Given that all businesses are unique in needs and operational activities, the banks do not dictate how businesses use the working capital funds, allowing companies to use the funds freely for whatever purpose the business needs. This flexibility also provides for an easier and smoother application process.

More often than not, businesses that need the working capital loans, are businesses that experience seasonality in their revenues. Companies utilize these business loans to tide over slower periods, allowing for business to continue as usual. Other businesses may use the funds to stock up before busy periods when revenues start to stream in, or even to jump on opportunities that allow for the business to expand and grow.

Why get a Working Capital Loan?

The purpose of the working capital loan in Singapore is to help business owners to tide through periods of slower revenues. Ideally, the main idea would be to allow ample time for the borrower to roll the money into revenue generating projects, where there will be sufficient returns for the borrower to repay the monthly installments.

As with firms in the construction business, or even a shop that sells durians, businesses that work on a project to project basis or rely on seasonal revenues, are bound to run into cash flow difficulties at some point. The objective of the working capital loan is to ensure that SME owners will have enough capital to continue business operations until the business picks up again.

On the other hand, some business owners do not face cash flow problems, so they take up the working capital loans for the purpose of expanding their business. This is a scenario where the working capital loans will serve a completely different purpose, and the business owner could use the funds to seize a rare opportunity that could potentially propel his business into greater growth.

What is the cost of the Working Capital Loan?

Structured as a booster for businesses in Singapore, the SME Working Capital Loan was designed to offer a large quantum, over a long term, at low interest rates. Interest rates can vary bank to bank, and from one institutional lender to the other. All the lenders will make their offers based on the financial strength and health of your business. Among many other requirements, lenders like to look at the age of a business. The longer the business has been around, the more confidence they have in its ability to repay the loan. Another thing that lenders look for are the valuable assets of a business, such as a property, or equipment. Generally, the more assets a business can put up as collateral, the more lenders are willing to lend to them, sometimes at significantly lower rates. This is simply because with collateral, lenders are able to lower their risk exposure and will consider the borrower as low risk.

With the SME Working Capital Loan, business usually borrow from between $50,000 to the maximum $300,000, depending on the myriad of factors that lenders assess businesses with. The tenure provided will be between 3 to 5 years, depending on the strength of the business. The stronger your business, the longer the tenure. Most lenders will also charge a small processing fee. So always be prudent to read through all the conditions of an offered loan to prevent being caught off your guard.

How to qualify for the Working Capital Loan?

These days it has become extremely simple to obtain a working capital loan, by simply going online to the Internet or by walking into any bank branch. There are so many online lending platforms, forums, and comparison websites that make it easy to get all the information you need. However, before embarking on your noble quest for funding, be sure to determine exactly how much your business needs. Also, do some thorough calculations to understand how much time your business needs to repay the loans. This will help you to pick out the most suitable product for your business.

After doing an online application, the lender will send a representative to meet you in person, usually a young relationship manager. During the meeting, there will be a few bank consent forms to be signed, which gives consent for a lender to do the relevant credit checks. There will certainly be a request for more documents as well. The required documents will vary from lender to lender. The relationship manager then collates all the documents and puts the case up to the credit department for assessments. Once there is an approval, the lender will present you with an offer letter that details the conditions of loan offer. It is imperative that you review the offer letter thoroughly, so that you are aware of every single clause and condition, and if it does not work for you, you can always find another financier. However, if the conditions of the loan offer are acceptable, you will be required to sign on the letter of offer to accept it. Loan disbursements will usually take place about 1 to 2 weeks after the acceptance of offer.

Working capital loans can do amazing things for a business. It can help you to jump onto an opportunity that could potentially propel your business to new heights, help to get a business through tough times, or expand the operations of the business. Carry out the proper due diligence of researching what lenders out there have to offer, so that you can choose the best and most suitable financial product for your business.