Compared to the SME Micro Loan, an SME Working Capital Loan WCL is a larger loan. The working capital credit enables firms to access less expensive funding over the S$100,000 cap since the Micro Loan is set at S$100,000. As the lender and the government share the risk, lenders have more assurance when making loans to expanding enterprises in Singapore.
The WCL Credit can be used for company growth, cash flow, buying goods from suppliers, funding ongoing business operations, and more.
The Government Of Singapore and the particular issuing bank share the risk under the Small and medium-sized Working Capital Loan financing arrangement. Businesses and SMEs can access unprotected working capital through this program, which Entrepreneurship Singapore and participating banks jointly conduct. The money can be used for cash flow or business growth.
What Are The Requirements To Apply?
Following are the requirements for applying for an SME Working Capital Loan. Except for listed corporations, all companies that have at minimum 30% Singaporean or Permeant Resident ownership are eligible. The length of the incorporation is dependent on the bank, as well as some banks want a larger or shorter period.
How Do I Apply, And To Whom?
The following paperwork is needed to apply, including but not limited to.
The loan amount is determined, among other things, by the average daily balance, outgoing transactions, and incoming cash flow. The evaluation method takes into account additional requirements, including personal income tax and credit bureau reports.
Finally, a description or justification of the loan’s purpose is necessary. We will handle this on your behalf if you are applying through Equity.
What Amount Can I Borrow?
With the new Enhanced Budgeting, SMEs are now eligible for unsecured working capital loans of up to $1,000,000, an increase from the prior limit of S$600,000. Businesses looking for more cash flow or corporate investment can benefit from this. The Singapore Government splits the risk among the banks by 90 percent and does not need any security for the loan.
The existing loan sum will be determined using your company’s last six months’ worth of bank statements, along with other pertinent factors.
How long may I borrow money?
You may borrow money for a maximum of 5 years or 60 months. You can request a year or a year and a half of interest-only payments with the increased working capital loan, meaning that you only have to pay interest for the initial year.
Additionally, there are no fees associated with early repayment, which allows firms to repay the loan whenever they choose while simply paying interest accrued up to that moment.
Therefore, business owners might choose a 5-year term with lower monthly payments and pay it off in 1 or 2 years to avoid paying interest.
In conclusion, the Government Of Singapore and Banks’ Working Capital Loan initiative is a significant effort to support SMEs. The low-interest rate allows you a principle deferment plan that lasts up to a year. There are no early repayment penalties either. This provides a flexible and adaptable borrowing choice for Singaporean enterprises. The government of Singapore has also given grants for home equity loan.
