Working capital loan is short-term funding for a company and SMEs provided by Singapore Government to help you boost your business performance. With this finance program, you may stabilize cash flow, invest in new projects and business opportunities, take advantage of suppliers’ early payment discounts, and improve cash collection from debtors.
This type of loan is usually non-secured, which means that—unlike property term loans or equipment financing loans—you don’t have to put up collateral for the full amount you borrow. The flexibility of unsecured financing enables SMEs in Singapore to grow their business without pledging assets such as private homes or factory equipment, and the term that a working capital loan offers is between 3 months to 5 years eventhough some lenders allow repayment based on your actual cash flow and need within the period of loan.sort
Various Purposes of Working Capital Loan Singapore
Aside from boosting performance, working capital loan (WCL) can also be used for various purpose, including:
- Increasing cash flow over pandemic
- Securing inventory and supplies
- Acquiring assets such as machinery, vehicles, or others productive.
- Immediate expense usage
- Managing debtors
- Taking advantage of early payment discounts/programs offered by suppliers
Working Capital Loan Has an Easy Disbursement Process
When you decide to apply for this lending program, banks will make sure that they have enough information about your business before approving a loan in order to make sure your credit standing and repayment ability of your loan. This can include your financial statements, bank statement, personal credit bureau and business plan.
Disbursement process of working capital finance is also faster than property or equipment financing as it doesn’t required to place any charge on the collateral. You only need to sign a personal guarantor for the loan and hold them liable as an individual in the event when the loan in defaulted.
Why Working Capital Loan is So Popular?
The most important thing about working capital loan in which an unsecured financing, is a type of financial loan that doesn’t involve the use of any asset or collateral as a security of guarantee. In other words, there’s no collateral against which a working capital loan can be obtained.
This type of financing option has gained popularity among Singapore-based small and medium enterprises as it provides them with flexibility while they are seeking to raise capital for their business operations. It also means that Singapore Government allow them to grow their business without pledging assets such as their home or factory equipments.
Moreover, working capital loan is not a bank overdraft nor has credit history requirements with more flexible repayment terms. Some lenders actually allow repayment based on your actual cash flow and needs within the period of your loan. Repayments may also be done in installments, or in a full a the end of term—whatever works best for your businesses.
Conclusion
If you are running small and medium business, looking for the right type of financing, then working capital loan should be the best answer. The greatest thing about this loan is that it’s flexible enough to fit your needs while also providing you with the cash booster you need to take advantages of any opportunities as they arise. If this sounds like something that might be right up your street, then we would love to hear more from you!
When you’re looking for working capital loan, whether it is for short-term or long-term requirement, Bizsquare Management Consultants can always advise and assist to obtain the best financing option in the market at your best interest.
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Melvin Ho, Founder and CEO of Bizsquare Management Consultants Pte Ltd
Fun fact about Melvin is that he likes to drink fresh milk every morning and he loves to play squash!