Everything You Need To Know About Getting A Working Capital Loan For Your SME In Singapore

It can be challenging running your own business. There are many hurdles SMEs often face — from administrative matters, ideas-generation, to finding enough money to fund your business. Many approach banks and private financiers for SME working capital loans in Singapore when facing such financial difficulties, especially during the initial phases.

Working capital loans can be handy in meeting your company’s financial needs. They are suitable for short-term financial obligations, such as capitalising on time-sensitive business opportunities and managing seasonal fluctuations.

Interested in getting a loan for your business? Here’s everything you need to know about getting a working capital loan for your SME in Singapore.

infographic on what you need to know about working capital loan
Working capital loans are short-term loans to cover daily operational costs.

Types Of Working Capital Loans

Working Capital loans are common loans businesses take to help them finance short-term operational costs. Here’s a brief introduction to the 6 different types of working capital loans in the market.

1. Invoice Financing

Invoice financing is a short-term loan that allows businesses to borrow based on their unpaid invoices. It provides you with an advance of around 70-90% of your outstanding invoices from lenders.

2. Business Line Of Credit

A business line of credit allows you to draw funds from a pre-approved sum of capital at any time. You’ll only need to pay interest on the amount of money taken out.

3. Auto Financing

In general, auto financing is a type of working capital loan that helps SME businesses purchase automobiles. It involves a revolving line of credit that allows your business to increase your vehicle fleet. Auto Financing loan that’s provided by Capitall is available for 2 types of businesses — Car Flooring for car dealers, and In-House for businesses and individuals.

4. Payroll Loan

A payroll loan is useful for SMEs who struggle to pay their employees. Instead of retrenching employees or making a pay cut, your company can take out a payroll loan to tide over rough financial situations such as recessions.

However, this is a short-term solution for temporal financial difficulties! If you face long-term issues with staffing costs, the problem probably requires a different solution.

5. Bridging Loan

Bridging loans are designed specifically to help bridge a financial gap. It is a short-term loan for businesses to meet current financial obligations. A bridging loan allows you to get immediate cash on hand to make urgent purchases.

6. Working Capital Loan

A working capital loan can be used to finance a company’s everyday operations. It’s commonly taken when companies do not have sufficient cash to cover day-to-day operations, or if they are looking to channel more funds for expansion.

There are many types of business loans available. While the ones listed are a part of business loans, they are short-term solutions to cover short-term operational costs. Keen on learning about business loans used for more significant expenses in the long run? Read about them here.

Businessmen having a meeting
Figure out how an SME working capital loan can help your business before applying for one.

Do You Need An SME Working Capital Loan?

To understand working capital financing, you first need to understand your current position. Whether it’s your business standing, your current working capital ratio, or how taking the working capital loan will impact your business.

Learn how to calculate your business working capital here.

We’ve outlined a few points you should take note before considering an SME working capital loan in Singapore.

First and foremost, will the working capital loan improve the financial position of your SME? Consider the costs and benefits of the loan before taking a working capital loan. You should ensure that the working capital loan will improve the financial position of your SME, and more importantly, that your SME can meet the repayments on time.

You should also understand what the actual cost is.

Do your calculation and due diligence by checking for hidden terms and costs before applying for the loan. Always ensure that you are given a full breakdown of the fees involved.

Additionally, figure out how soon you need the working capital loan. If the funds are for emergency use, you can consider approaching private financiers such as Capitall, who can process and approve your loan within 24 hours. Banks, however, may take up to a few weeks or a month to process your loan.

Read more about the essential questions to ask here.

What Are The Pros And Cons Of An SME Working Capital Loan In Singapore?

A working capital loan for SMEs is an unsecured loan. This means that there is no collateral for the loan. Instead, the loan entirely depends on your creditworthiness.

Here’s a summary table to explain the advantages and drawbacks of taking an SME working capital loan.

AdvantagesDisadvantages
Short term loans for quick needsShort term loans cannot cover investment or growth needs
Faster process and approvalHave to pay back the full principal amount and interest
Requires no collateralMay compromise your credit rating if you’re not diligent in repayment
Keep full ownership of the business
Source: allbusiness

What Are The Eligibility Criteria To Get An SME Working Capital Loan?

Here is a list of the general eligibility criteria you will need to meet to get an SME working capital loan.

1. Business Must Be Registered On Acra
All businesses must be registered with the Accounting and Corporate Regulatory Authority (ACRA).

While there are some exceptions, businesses that carry out any activity for profit on an ongoing basis need to be registered. You can be fined if your SME is not registered.

Financial institutions require your SME’s business profile information from ACRA. The document from ACRA will show your business information, directors, shareholders, and the SME’s paid-up capital. This helps lenders understand your SME better.

2. Operating History Of At Least 1 Year
Banks usually only give working capital loans to companies that have an operating history of at least a year. This will boost their confidence that the SME is relatively stable and can meet the repayments.

If you’re a new business, you may consider applying for loans from private financial institutions such as Capitall which offers loans for companies with an operational history of at least 10 months.

3. Minimum Annual Revenue Of At Least S$100,000
Usually, banks and private financiers check for your business revenue before approving your loan. They need to be assured that you’ll have the ability to repay the loan. As such, the minimum annual revenue required of SMEs is at least S$100,000.

4. Citizenship Of SME Director
One director must be a Singaporean, PR, or a foreigner residing in Singapore.

Documents Needed For A Successful Working Capital Loan Application

Financial institutions rely on documents about your company to make an informed decision on whether they should lend you a working capital loan. That’s why having the right documents is crucial for a successful working capital loan.

These are the 5 main things you should prepare before applying for a loan.

1. Bank Statements
Prepare the latest 6 months of bank statements. Having a substantial amount in the bank will increase the lender’s confidence in your business’ ability to repay the working capital loan.

2. Financial Statements
You’ll need company financial statements for the past year as well. Often, lenders will want to review your cash inflow projections and spendings.

A detailed and up-to-date financial statement will increase your lender’s confidence in you and also signal that you’re reliable and organised.

3. CBS Credit Report
The financial institution will also ask for the latest Credit Bureau Singapore (CBS) credit report of your company. Often, the CBS credit reports of directors are also examined.

Directors are usually required to give personal guarantees for most business loans. The credit record of directors is thus also considered. Poor credit behaviour can negatively impact your SME’s credit assessment and reduce your chances of getting your loan approved.

4. MLCB Report

Other than the CBS credit reports, you may also be required to produce the Moneylenders Credit Bureau (MLCB) report. Similar to the CBS report, it shows your business credit history. While CBS report is commonly required if you’re borrowing from banks, MLCB is required if you’re borrowing from private financial institutions.

5. Additional Documents
You may also be asked to provide additional documents, such as upcoming contracts, aging reports, and expected invoices.

Prepare other documents that you think may apply to the loan assessment too. The loan assessment is mainly to ensure that your SME is reliable and can meet repay the loan on time.

Need a short-term working capital loan for your SME? Reach out to Capitall to secure your business funds today.

Share:

Read Our Other Articles.

Business Loan Business Loan In Singapore: How Can Invoice Financing Help Your Business?

Being cash-strapped is not a great feeling. Running a business and managing operational expenses and monthly overheads can get stressful. Thus, having a good cash flow is essential to ensure that your business stays afloat and prospers. But how do you ensure a good cash flow when your business relies heavily on invoice payments? Outstanding […]

Business Loan Invoice Financing in Singapore: A Business Loan For SMEs

It is never easy having to rely on multiple clients for income. As reliable as they may be, no client is immune to the need for an occasional late payment request, especially in times of economic crisis like global pandemics or recessions. Neither is a 60-day invoice that you issued to a client going to […]

Business Loan Business Loan In Singapore: How Can A Business Line Of Credit Help Your SME?

As a business owner, you probably have had your fair share of experiences managing tricky financial situations. Finding yourself in a position where your business finances are not enough to cover operational expenses can be daunting. In times like this, turning to a business loan in Singapore can be useful. A business line of credit, […]

Business Loan Business Loan In Singapore: When Should Your Business Consider Payroll Loans?

Managing a business in Singapore is not easy. Operating costs such as payroll make up for a considerable percentage of your monthly overheads. As a business owner, you may have run into a cash flow crunch and need a quick influx of cash to pay your employees or hire extra help. This is where many […]

Business Loan How A Business Loan Can Prepare Your Business For A Post-Pandemic World

2020 has been one of the most challenging years for businesses worldwide. With COVID-19, there are many unexpected costs and preparations to be made. Although many companies in Singapore have reopened, it may take some time before business picks up. If you are a business owner, what should you do to prepare you and your […]

Business Loan Business Loan In Singapore: Guide To Taking An in-house auto financing Loan

Is your business in need of vehicles for transportation? Or are you an individual looking to own a car in Singapore? Whether you are looking for a fleet of vehicles for your catering, delivery, or cleaning business, or just an individual looking for a car, business loans in Singapore can be a great help to […]

Business Loan 4 Essential Questions To Ask Before Engaging An SME Loan Broker In Singapore

This period of unexpected circumstances in Singapore is forcing SMEs to face monumental challenges. Businesses from almost every sector have been impacted by the recession and the Covid-19 situation. If your SME business has been hit, you are likely looking for solutions right now to tide through this season. So where does a Singapore SME […]

Business Loan Should You Engage An SME Loan Broker For Your Business In Singapore?

At some point in your business, be it at the start-up or expansion stage, you might find the need for extra funds to push it forward. You might also be wondering if it’s worth engaging the services of an SME loan broker for your business in Singapore.  Would hiring a loan broker add value to […]

Business Loan How Credit Rating Affects Your Business Loan In Singapore

If your business is in need of funds and you’re seriously considering taking a loan, you will need to know the importance of credit ratings. No matter what sort of business you run — a large global business or a local SME, credit ratings play a significant role in helping you secure loans. In fact, […]

Business Loan Getting A Business Loan Doesn’t Have To Be Hard. Read These 4 Tips.

Your business needs that extra funding to allow it to move forward. If you are unsure of which lenders to go to or how to approach them, the process of getting a business loan can be daunting. Borrowers often make the mistake of not doing thorough research on which lenders to approach or the types […]

Business Loan Business Loan In Singapore: All About Expansion Financing

If you own a small-medium enterprise (SME) business that has charted success in consecutive years, you might be thinking of scaling up your business further. The question is whether you have enough resources to see through your plan. This is where taking up a business loan in Singapore in the form of expansion financing could […]

Business Loan Business loan In Singapore: What Is A Bridging Loan And How Can It Help My Business?

What Is A Bridging Loan? A bridging loan is designed to help companies and individuals tide over a short period of financial challenge.  For companies, this is a type of business loan that can be used to increase working capital while waiting for longer-term financing to come in.  To individuals, a bridging loan usually applies […]

Business Loan Business Loan In Singapore: What Is Auto Financing – Car Flooring Loan?

Whether you’re a business owner in the automobile dealer industry or looking to start up your own auto dealership, you’d probably know how expensive inventory for automobiles is. Businesses that have to deal with such huge purchases usually take up business loans in Singapore to manage their inventory and showroom. For a business owner in […]

Business Loan How To Start A Business In Singapore: 6 Simple Ways To Get Funded

Are you a business owner? Do you own an SME in Singapore? Or perhaps you are thinking of finally launching your startup? There are many challenges when it comes to running a business. Businesses that have been around for an extended period of time could be thinking about expansion and growth. On the other hand, […]

Business Loan An SME Loan Broker In Singapore Vs A Direct Lender: Differences You Should Know

You might have an impending need for extra working capital in your business. As you research possible sources for a loan, you might have come across the services of an SME loan broker in Singapore. But what exactly is an SME loan broker? How can such a broker fit into your plan of getting a […]

Business Loan 5 Reasons Why Your SME Needs a Working Capital Loan

Utilities, staff salaries, inventory, equipment rental — these are just some aspects that make up day-to-day operational costs. To keep your business running, you first need to have enough capital to get it started. And this is perhaps the greatest challenge of most businesses. Working capital is, fundamentally, a term for having money on hand. […]

Business Loan How Does Getting An Sme Working Capital Loan Help My Business?

Taking a working capital loan in Singapore is common among SMEs. In short, a working capital loan is a specialised type of loan designed to help businesses cover daily operational costs.  Unlike other business loans, working capital loans generally do not need you to state the purpose of borrowing, as these loans are short-term and […]

Business Loan How Much Should You Get For Your SME Working Capital Loan

If you’ve been following this space, you would know that we’ve been discussing what working capital loans are and how they can benefit SME businesses. Working capital loans help SMEs finance day to day operations and provide short term solutions to pressing challenges such as seasonal fluctuations and downturns. Perhaps your business needs to take […]

Business Loan 9 Things To Ask Before Getting A Business Loan In Singapore

Gone are the days when banks are the default go-to place in getting a business loan in Singapore.  Small and medium-sized enterprises (SMEs) these days have various options ranging from banks to private financial institutions that offer different types of business loans. As your business grows, it would most likely need more financing to expand […]

Business Loan 5 Common Misconceptions On Getting A Business Loan In Singapore

Thinking of striking it out on your own? Do you have big plans and an ambitious vision but don’t have enough capital yet? Getting a business loan in Singapore might just be the first step you need to take! Many business owners hesitate to take a business loan due to a range of reasons. It’s […]

Business Loan Why Your Business Loan In Singapore Might Have Been Rejected

There’s nothing more frustrating than to find out that your business loan application has been rejected.  Business owners look to banks and financial institutions to get business loans for a myriad of reasons. Whether it is to expand, innovate, or to cover day to day operations, having access to funds at the right time is […]

Business Loan Business Loan In Singapore: 6 Tips To Increase Your Approval Chances

Does your business need a loan? Have you already tried applying for loans in the past but got rejected?  In Singapore, it’s almost impossible to go about building up your business without getting a business loan. Having your business loan rejected can be extremely troublesome.  If you have been following this space, we have previously […]

Business Loan 6 Reasons Why SMEs Take Business Loans In Singapore

In Singapore, 65% of the economy is made up of SMEs. From e-commerce startups to financial products, there are all sorts of SMEs in the Singapore market. With a high saturation of competitors in different markets, growing your business is extremely challenging in Singapore.  On top of stiff competition, SMEs also face the challenges of […]

Business Loan Avoid These 6 Mistakes When Applying For A Business Loan In Singapore

Starting a company can be a challenging feat. Not only must you have a good business idea, but you must also get enough capital. That’s not even considering all the countless administrative matters to handle. The first part, getting a good idea, is often already established when the company is founded. However, most companies struggle […]

Business Loan Business Loan Options Every Business Owner Should Know

Thinking of starting a business? Perhaps it has always been a dream to strike it out on your own? If that sounds like you, you are going to need a business loan.  Having enough capital will make a world of difference for your business which is why knowing where to get the best business loan […]

Business Loan SME Working Capital Loan: 6 Types Of Short Term Financing Options To Boost Your Working Capital

Running a business costs money. If you are an experienced business owner, you would know that it is not easy to run a startup in Singapore. From employees’ pay to inventory, or even just turning the lights on, the cost of day to day operations adds up. That is why loans are unavoidable when you […]

Business Loan Working Capital Loan For SMEs: 5 Essential Questions To Ask When Taking One

Have you ever considered taking a business loan to meet the financial needs of your Small and Medium Enterprise (SME)? If yes, you probably have heard of working capital loans for SMEs. In short, working capital is the money companies use for daily operational expenses. Managing your working capital properly can be challenging for an […]

Business Loan Digital Presence and E-Seller loans in Singapore

As the world is moving at a fast pace, the society is converting into a cashless society. People are more likely to be digitally active and doing business. Online selling and buying have become a new business market. The new generation is drawn towards the trend and soon the world will convert into a society […]

Business Loan 7 Ultimate Reasons Why Successful SMEs Get a Business Loan

Small and medium enterprises (SMEs) continue to be one of the biggest players in Singapore’s economy. Based on a survey conducted by SME Magazine, SMEs continue to grow amid economic difficulties. The data also showed that the average revenue increases by about 109% than the previous year. As SMEs increases in numbers, we have observed […]

Personal Finance How to Manage Your Finance?

Managing your finances is a very tedious task especially for the ones who don’t understand accounts and finance at all. Most of us, even the ones who have just stepped adulthood have a job. We may have our own startup, work in an MNC, or maybe a government employee. We are here to let you […]

Media CNA | The Entrepreneur 2019

This series celebrates the achievements of 10 businessmen and women who prove to have what it takes to break boundaries and emerge as winners of Singapore’s Entrepreneur of the Year Awards (EYA).

Media sgsme.sg | 10 Business Leaders Recognised as Entrepreneur of the Year

From training aspiring pilots to lending money, 10 local entrepreneurs received the Entrepreneur of the Year Award (EYA) 2019.

Media MoneyFM89.3 | The Breakfast Huddle

Find out how local firms are helping F&B SMEs scale their businesses.

Media The Business Times | CEO Conversation: Transforming into a Digital Financial Services Provider

Singapore-based Capital C Corporation has come a long way since the inception of its money lending arm in 2011.

Media e27 | The Case for Alternative Lending

In the last decade, we have witnessed rapid growth in the alternative lending space, with the creation of new business models opening up the range of alternative lending products available.

Media APAC CIO Outlook | How Fintech is Driving Innovative Lending

In Singapore, SMEs account for around two-thirds of the workforce and a large chunk of GDP growth.

Get Your Business Loan Now.

Apply now, and receive your business loan within 24 hours*.