SME Working Capital Loan Interest Rate

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As announced in Supplementary Budget 2020 by our Deputy Prime Minister, Mr. Heng Swee Keat, our SME Working Capital Loan initiated by EnterpriseSG is improved further. This allows Small Medium Enterprises in Singapore, through the participating banks and financial institutions with a risk-sharing factor of 80% to access their working capital, to be even more important during this CoVid19 outbreak. The funds can be used by businesses & companies to increase everyday activities such as recruitment, management of new projects and many more.


SME Working Capital Loan Singapore is a company business loan to cover daily operating costs in Singapore.

To support visible SMEs with cash flow concerns or who wish to continue growing their company, the Government has started a new SME Working Capital Loan scheme for up to S$1 million per SME. Under this system, To stimulate lending to be small and medium-sized enterprises, the Government will co-share 90% of its default risk with participating financial institutions. This will help small and medium-sized businesses pay lower interest rates.

The SME Working Capital Loan will be available for three (3) years, started in 2016 and was developed in 2020 to the loan to $1 million. Recently, Government has just declared to renew their Working Capital Loan scheme.

Click HERE to submit your loan inquiry now!

Suitable for at least two (2) years old, enjoy cash flow certainty with a government-assisted working capital loan of up to S$1million*.

  • Working capital of up to $1million

  • Tenure up to five (5) years

  • Interest rate from 3.5 – 5.5% annualy
  • No Collateral

  • Fast & immediate attention to your business details

Funding Support

Working capital (e.g daily operations) Up to $1million Up to 5 years Subject to Participating Financial Institutions’ assessments of risks involved

To help SMEs access Working Capital loans, We shares the risk of loan defaults with Participating Financial Institutions in the event of company insolvency.

  1. Should be a registered SME company in Singapore and should be a business for at least one year.
  2. Annual turnover of $100K and more.
  3. Employment group not exceeding 200 employees.
  4. Minimum 30% shareholding by Singaporean PR.
The maximum amount of small enterprise financing varies between different banks and will depend on your credit profile (revenue size, industry, cashflow position, etc.).

The maximum amount of funding granted to SMEs by most banks ranges from $300 to $500K. However, the total amount is challenging to secure unless the company has a nearly perfect loan profile. If your central bank cannot meet your requested amount of financing, you may also apply simultaneously for the maximum amount of funding from other banks.

  1. For professional advice, call and meet our consultants.
  2. Bring the following supporting documents for the meeting;
  • Bank Statement
  • Financial Statements
  • Personal income tax assessment of owners and directors

SME loan applications usually have a turnaround time of 2 to 4 weeks.

It takes this long turnaround time because:

  1. You may not be familiar with the documents required and the application process.
  2. You may have more back-and-forth communication with the banker to get the financing application right.

You will have to wait 1 week to receive a further disbursement if you can secure approval after the loan application review. Therefore, expect a turnaround period of between 3 and 5 weeks from the application to receive funding.

Alternative financiers like P2P crowdfunding platforms are another viable choice for those who cannot afford to wait because applications are typically processed fast within 1 week. Be willing, though, to pay higher interest rates or fees than bank options.

Most applications for loans from SMEs can be rejected for several reasons, for example:

  1. Approaching the wrong banks
  2. Business owner’s personal credit profile
  3. Limits to financing for existing bankers
  4. Weak cash flow

Imagine this: You urgently need funds. Maybe confirm a tender or take a chance for a large project.

However, if your request for an SME loan is rejected, either you have to cancel this project or postpone it. You could block the expansion plan of your company because of the missed opportunity.

In addition, you may not be able to apply for the same Bank for the next 6-12 months if your application is deprecated!

To minimize rejections, you must identify the right Bank to seek funding and deal appropriately with credit concerns and queries by the Bank.

Various loan products are available to satisfy the various requirements of SMEs. Facilities for common SME loans:

  1. Unsecured business term loan
  2. Trade financing (Letter of Credit)
  3. Invoice Financing / Factoring
  4. SME Micro Loan
  5. SME Working Capital Loan

How do you reduce the complexity and technical jargon of the work capital loan to be employed most adequately?

Thanks to our knowledge and experience in securing SME financing, we explain basic terms and how you can best use different financing products in your business.

There are nearly 20 banks and financial institutions that provide small business loans to small and medium-sized enterprises.

There is, therefore no answer, because the credit criteria and risk appetite differ in different banks.

Do you know that certain banks are shunning some industries and other banks are likely to welcome them?

However, most SMEs do not know which banks are suitable and could waste their valuable time talking to banks that are not fit.

In addition to traditional mainstream banks, there is also a range of alternatives to finance SMEs.
Our core business remains to help small and medium-sized companies.

Because we know of various banks’ credit criteria, we can assist in identifying the best banks for your company’s profile to ensure the best chances of receiving a trade loan at the best possible level.

If your personal credit rating is terrible, you could harm your commercial loan application. Usually, your personal credit record is assessed by the banks in charge when applying for an SME loan in Singapore. This will also affect your company’s chances of approval of your personal loan record. The acceptance of your personal credit score as a corporate owner is critical. Any harmful damage to your personal credit will adversely affect your business loan applications, making any form of business financing virtually impossible.

Therefore, always be conscious of protecting your personal credit grading by paying all your credit cards, home loan, car loan etc., on time. Settle any overdue payments promptly, and be cautious not to over-extend your personal credit at all times.

Yes, but options for new start-ups are minimal. Most banks do not provide newly registered companies with start-up business loans.

Most banks lend to the record of tracking and require applicants before considering the extension of funding to have at least 1-2 years of operational business history.

A competent SME Loan Broker could still help to secure business funding if your business is operational and at least 6 months old.

However, for very young companies and also for less funding, there are minimal funding options expected. If any form of commercial loan is secured, make sure your company has a good credit record quickly after payments are made.

As your business matures and combined with a good credit record, other banks will be easier to fund with more options in the future.

Funding Overview

1. Loan Quantum Up to S$1,000,000 of unsecured loans
2. Interest Rate as low as 3.50% p.a simple interest (effective interest 6.50% p.a)
3. Processing Fee From S$0
4. Repayment Period Up to 5 years.
5. Unique Features There is no penalty charge for early repayment, subject to the Financier’s Notice Period required.

SMEs may request for a moratorium (deferment of principal repayment) for one year, subject to assessment by participating financial institutions.

6 Validity Period** Current till 31st March 2021

Application Criteria

  • Eligibility

• A business incorporated in Singapore for at least six (6) months with at least 30% local shareholdings (Singaporean and PR).

• A business that has an existing corporate account with active transactions for at least six (6) months

• A business with an Annual Sales Turnover of ≤ S$100million or CPF-payable Employees ≤ 200

  • Documents

• NRIC copy (front & back) of directors/ partners/sole-proprietor

• Individual Income Tax Notice of Assessment (NOA) of directors/partners/ sole-proprietor for the last two (2) years.

• Company bank statements for the last three (3)* or six (6) months

• Business financial reports/statements for the last one (1)* or two (2) years

*Dependent on Financier’s requirement

Get started in 4 easy steps.

  1. Fill up the form & submit
  1. Engaged by our designated consultant
  1. Consultant presents on the proposed business solution
  1. Get your funds upon approval

How It Works

  • In receiving your inquiry, our assigned Business Consultant will get a summary of your business finance.
  • The assigned Business Consultants will brief you on the application process, the best-suited solution, and credit facilities for your company based on your needs during the scheduled appointment.
  • We will assist you with the whole process of your application until approval & disbursement.
  • During the procedure, additional documentation required to aid in the application approval might be asked from you.
  • Please allow 2 to 4 weeks* for your application’s assessment, submission, negotiation, and approval.

• If approved, disbursement takes about 3-5 working days upon signing the Letter of Offer.

Fill up the form

Start Your Application Today!

We help our customers to get the right thing financial assistance by objectively evaluating their company profile & documents before finding the most relevant financial institutions to give them the highest loan approval chances.

We also try to get the most desirable deal for our clients by looking for the cheapest interest rates in the market, but this could still differ depending on the company’s financial standing & profile.

If your company cannot qualify for a loan at the moment, we also advise on what areas you can improve to be eligible in the future.

1. What exactly is the goal of the Enhanced EFS-WCL? What are the new features?

SMEs throughout all industries can access the enhanced EFS-WCL to meet their business needs.

The Government will further enhance EFS-WCL with a 90% risk share, as announced by the Solidarity Budget of April 6 2020. New applications began from April 8 2020, until March 31 2021, will be subject to enhancement. Enterprises are advised to discuss eligibility with their PFIs for applications pending approval by PFIs.

Under this regime, eligible companies may request a delay of principal payment, subject to an assessment from the PFI, to reduce their monthly cash outflow.

2. Can businesses apply for the Enhanced EFS-WCL with different PFIs multiple times?

Yes, companies may apply to various PFIs. Nevertheless, the total sum of the loans from multiple PFIs under the scheme is limited to a maximum of S$1 million.

3. Is it possible for businesses to apply for the Enhanced EFS-WCL if they have already used it for the current EFS-WCL?

Yes. Included in the EFS-WCL, the eligible companies may also apply for up to a total amount of up to S$1 million for the Enhanced EFS-WCL. PFIs shall evaluate the approval.

4. How can businesses take advantage of a lower interest rate on Enhanced EFS-WCL approved by banks from March 2 to March 31, 2020?

In consideration of the risk profile for each loan application, interest rates shall be determined by PFIs.

In new credit requests submitted from April 1 2020, PFIs have agreed to reduce interest rates. PFIs may offer the lower interest rate for loans paid to borrowers from April 1 2020, for the remainder of the loan tenure.

To lower interest rates for loan tenure, the borrower is encouraged to contact their PFIs.

5. Can enterprises apply for the Temporary Bridging Loan Programmed (TBLP), the Enhanced EFS-WCL and the Enhanced Enterprise Financing Scheme Trade Loan (EFS-TL) simultaneously?

Companies may apply to all three schemes, subject to PFI assessment if they comply with the criteria for each project.

6. Can enterprises that have already applied for the Enhanced EFS-WCL request for deferral of principal repayment?

Enhanced EFS-WCL companies may request up to 1-year postponement of principal repayments, subject to the assessment of PFIs, for their PFIs already obtained.

7. Since Enterprise Singapore provides a 90% risk share on loans, does it mean that the borrower/guarantors are only responsible for the remaining percentage of the loan?

No. The borrower and guarantor shall reimburse 100% of the amount of the loan. In the event of defaults, PFIs must take their standard business recovery process, including implementing security, before they may claim the uncovered amount in proportion to risk-share against Enterprise Singapore.

8. Why do banks require a 100% Personal Guarantee (PG) when the Government covers 90% of the loan amount?

A PG is not simply a security instrument but also signals the guarantor’s commitment to the obligation of the loan.

9. How does the proposed law under the “Covid-19 (Temporary Measures) Bill” allow me to defer my principal or interest payments as well?

The Ministry of Law (‘MinLaw’) has introduced the COVID-19 (Temporary Actions) Bill to grant temporary relief to companies and individuals who cannot comply with their obligations under the COVID-19 contract. It covers the agreements that have been concluded or renewed before March 25 2020, with relevant contract obligations and will be in place for a period of 6 months.

They should note that SMEs seeking protection for the proposed bill can charge charges and interest for failure to repay or delaying loan obligations, even if banks cannot start legal proceedings against defaults on loans within the prescribed six-month period.

SMEs faced with cash flow problems need to engage their leaders actively to understand their relief options.

Working capital loans are frequently used to finance business expenses such as salaries, rents, and operating costs and manage cash flow gaps in the company’s slow season.

The financing of a company is one of the most complex parts to open. Whether you run an early start-up or a small established business, it costs money to expand and operate your business.

Financing is a large small business landscape, and it can be a challenge to find the right kind of funding. Many companies decide to make a working capital loan to cover their daily expenses.

Loans are often classified according to what they are used for. For example, mortgages are long-term real estate lending. On the other hand, working capital credits are loans that finance day-to-day business.

Companies use work capital loans to cover payroll, rental, and debt payments. They are often used in the off-season by cyclical enterprises, whose debt is paid off during the busy season.

For small companies that need cash quickly to cover immediate expenses, this is a flexible credit alternative. Working capital credits should not be considered, however, as a long-term financing option for business development.

Cash flow loans are similar to work capital loans, but only on past and future cash flow projections for your business are approved. You may not have to provide collateral, and it will take a few hours for the approval process. Compared with other business financing options, this is a highly flexible loan that requires a large number of hoops to be approved. Be careful about the interest rate and ensure that you and an attorney read any agreement in full before you sign.

Some banks may issue loans for working capital, but online alternative lenders are the leading providers. These lenders offer ideal conditions and simple approval qualifications. Banks are often intensively approved and are less likely than alternative online lenders to approve credits.

Many of the online platforms are intuitive and straightforward, and you can apply for approval. Others even offer online apps and portals for managing your loans. Speed and flexibility are one of the advantages of the working capital loan. You can quickly access financing options with online lenders, which can assist you during daily business activities.

Working capital is essentially only a term for money. You have ‘working capital’ if your assets are higher than your liabilities. When it comes to improving working capital, there are several different options. The old-fashioned way would be the most intuitive – to try various strategies to make more money. Additional work capital increase options include:

  • Borrowing money.
  • Selling long-term assets for cash.
  • Replacing short-term debt with long-term debt.
  • Choosing vendors with discounts.
  • Analyzing fixed and variable costs.
  • Managing inventory.
  • Taking advantage of tax incentives.
  • Keeping all financial records current.

Increased working capital is a common challenge for all companies. While many small businesses aim to build a better community and offer a good service or product to a loyal customer base, it is still crucial to make money. It may be time to consider a working capital loan if you run a company and have used up all your options for your working capital.

In a successful business, strong cash flow is essential, but you must manage cash flow as usual. It fluctuates and may not meet certain obligations during downtimes or when your business is growing. That is why there are work equity loans. They allow small business owners to cover their expenses while they are still working.

Working capital evaluates an undertaking’s capacity by indicating short-term financial health, debt cancellation capacity within one year, and operational efficiency to pay its existing liabilities with its current assets.

Working capital is the difference between the current and existing assets of a company. The challenge is to determine the correct category for the wide range of corporate balance sheets of assets and liabilities and decipher the company’s health when it meets its short-term commitments.

Components of Working Capital 

Current Assets

A company has this – tangible and intangible – that can quickly turn into cash within one year or one business cycle, whatever the less. Current assets are covered in accounting, cash and cash equivalents account receivable, inventory, and other short-term prepaid expenses; very liquid marketable such as stocks, bonds, mutual funds, and foreign exchange-traded funds (EMFs).

The current assets of discontinued transactions and interest payable are other examples. Recall that existing assets are resources that can be converted relatively quickly into cash and that they do not, therefore, include long-term or illiquid investments such as hedge funds, property, or collectibles.

Current Liabilities

Similarly, all debts and expenses the company expects to pay are current liabilities within a year or business cycle, whichever is less. Typically, this includes ordinary operating costs such as rent, utilities, materials and supplies, interest or principal debt payments, accounts payable, accrued liability, and income taxes charged.

Also in this category are dividends due, capital leases due within one year, and long-term debt owing.

Based on the current ratio of existing assets divided into current liabilities, the working capital is calculated. A percentage greater than one means that existing assets are more significant than liabilities, and the higher the ratio, the better.

The capital borrowed is money borrowed to invest. The company and shareholders have an equity share capital that differs. The capital borrowed is also known as “loan capital” and can be used for profit growth, but it can also result in losing the lender’s money.

Understanding Borrowed Capital

Companies have to operate capital. Capital is wealth that creates more wealth. Capital for companies comprises assets — real estate, factories, stocks, cash, etc. Companies have two options: debt financing and equity financing. Debt is money borrowed from banks, individuals, or the stock market. Equity is money that already has the company in its coffers or can be raised by the owners or investors of the company. The word “capital loaned” is used to draw the distinction between capital acquired by debt and equity capital.

Many different methods of borrowing make up the capital borrowed. These can include credits, credit cards, overdraws, and debt issuance like bonds. In all cases, a borrower shall be charged the borrowing cost of an interest rate. In general, collateral ensures debt. The mortgage is guaranteed through the buying of the house. However, borrowed capital can also take a debenture and is not secured by an asset in that case.

In the economy, borrowed capital is commonly used for personal or business reasons. Almost 80% of small businesses in the United States relied on borrowed money in operating their businesses, according to the 2019 Congressional Research Service report. Small enterprise loans totaled S$866,000,000,000 billion in 2018.

The potential for higher profits is the upside of investment with borrowed capital. The downside is you must redeem the potential for more losses since the money borrowed is irrespective of the performance of the investment.

Example of Borrowed Capital

If a person buys a home, they usually make a down payment to use a personal finance example. The down payment is derived from your wealth, your savings, or proceeds from selling another house. If a place costs S$415,000, it will pay a down payment of S$85,000, a down payment of 20%; the US standard. The rest of the cost of the house would have to be borrowed from S$330,000 (S$415,000 – S$85,000).

The extra money to buy the house would have to come from a bank as a mortgage loan. Therefore, the place that is now part of the homeowner’s property is purchased in the form of a hypothecary with equity and debt or borrowed capital. In addition to the principal payments, the costs of loaning the s$330,000 would come with a monthly interest rate to be paid by the owner.

Investors often focus on revenues, net incomes, and profits per share in analyzing financial statements. While researching the income and profit of a business is an excellent way of understanding its overall health, the study of the accounts receivable allows you to go deeper in your analysis.

The simplest way to measure the cash that a company owes for goods or services already provided is for the accounts receivable. As in the future, the business expects money, accounts receivable are included in the company’s balance sheet as an asset. Nevertheless, most companies do not anticipate collecting 100% of the funds in receivables.

Given the risk that you will be unable to pay, you may wonder why companies continue to provide goods and services without having to pay in advance. A business can benefit from the credit marketing of its products and services for regular and reliable customers. This may allow more sales to be made and transaction costs to be reduced. As an example, instead of processing numerous small payments, the company can regularly invoice reliable customers.

The problem lies in the fact that account accounts due reflect unreliable customers’ money. Customers can fail to pay and force the company to accept a loss. The company predicts that customers do not pay all their accounts receivable to account for this risk. This portion of funds is referred to as the inadequate debt allowance.

It is impossible to know whether a company’s accounts receivable reflect healthy or unhealthy business practices with the face value. Only through careful analysis can investors gain this knowledge.

How to Analyze Accounts Receivable?

Over the years, analysts have developed numerous ways to detect the underlying quality of a company’s receivables.

The use of the receivable-to-sale ratio is one of the simplest methods available. Investors can determine the extent to which customers have not yet paid their sales by this ratio consisted of their accounts receivable divided by their sales. A higher figure indicates that payments from customers may be burdensome for the company to collect.

Another easy method is to investigate how the company’s inadequate debt allowance has changed over time. This allowance is usually shown in the banknotes, but sometimes it is included in the balance sheet. If lousy debt allowance has grown considerably, the company may have a structural deficit regarding its ability to collect customer payments.

Simultaneously, dramatic decreases in lousy debt allowances show that the company management had to write out portions of its accounts receivable completely.

Read the Notes to the Financial Statements

More demanding are other analytical methods. For instance, the notes to the accounts may include customers with outstanding debts. Collect these names and check each customer’s creditworthiness. The probability of each customer repaying their portion of the company’s accounts receivable is then estimated.

While this analysis can produce valuable insights, it can also take time because the creditworthiness assessment process may become highly complex.

The analysis of the diversification by industry of debtor customers consists of a more accessible method to assess the quality of accounts receivable. If an economic downturn affects that sector, a firm that owes performances receivable to customers concentrating in a given field may be vulnerable to default.

Conversely, a company that has high diversification in its receivables may be less vulnerable on the basis that the repayment rates of its receivables in their entirety are not likely to be significantly affected by an economic downturn in any particular sector.

Investors may consider an enterprise relatively safe as an extension of this logic if each of its debtor clients owes only a relatively small part of the accounts receivable. Under these conditions, a default on the financial health of any of its customers could not have a significant impact.

Finally, another standard method of analysis involves examining how overdue the payments of each customer are. The “evaluation” of the receivable accounts can help answer any long-term problems with specific customers. Like most approaches, this analysis results more informatively if investors use long-term data.

The Bottom Line

There are many other options for analyzing accounts receivable in addition to the techniques described above. Although individual investors disagree about the best way, few would debate the critical component of due diligence investments in account analysis.

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About FR Capital

FR Capital is a Singapore consultancy firm that helps SMEs to secure business loans from banks and financial institutions. We concentrate on SME finance, and through our expertise and network, we help clients secure funding with low-interest rates efficiently and hassle-free.

Our Services

At iBusiness, we believe that everyone should have an equal opportunity for financial access.

That’s why we have committed ourselves to make affordable financial products and services accessible to all businesses, regardless of size and net worth. Through digital technology and operational efficiency investments, we continually devise new methods to provide convenience to SMEs.

At the same time, we never lose sight of our service excellence. We want to build a relationship with our clients that goes beyond finance.

To qualify for a loan, you have to be

  • A Private Limited Company registered with ACRA
  • One of your directors must be a Singaporean / Permanent Resident or foreigner residing in Singapore.
  • Your business should also have an annual revenue of at least $100,000.
  • Preferably, your business has also been in operation for at least 10 months.

Loan Information

  • Latest 6 months of Bank statements
  • Company Financial Statement for the past year
  • Latest Credit Bureau Singapore (CBS) Credit Report of Applicant(s)
  • Latest Moneylenders Credit Bureau (MLCB) report of Applicant(s)

In addition, you may provide any upcoming contracts, aging reports, expected invoices, and other documents that you think may be applicable to the loan assessment.

Each loan is subject to assessment. Our loan rates range from $5,000 to $300,000 per application.

Depending on your company’s SME profile and credit analysis, interest rate can vary from 2% to 7% per month.

We have a flexible repayment structure. Repayment can be made in weekly, bi-weekly, and monthly instalments over 2 to 12-month terms.

Once you have submitted your documents, we will contact you to verify the application. During this process, additional documents may be requested to have a better understanding of your company’s creditworthiness.

If your application meets the credit risk criteria, approval is typically completed within hours. Once all the required documents and information has been submitted properly, you can get your loan within 24 hours of the application.

As a business owner, we understand the need for cashflow and hence our various loan products such as working capital loan, business line of credit, and bridging loan are meant to do just that!  We aim to provide business owners like you with liquidity to tide through that tight cash flow period.

Obtaining Your Loan

Upon the approval of your application, you should receive your loan within 24 hours.

A personal guarantee is required for all loan applications.

You may make full repayment prior to the end of the contract period. However, an early redemption fee may apply.

During Application

We have gone digital!
All documents can now be submitted electronically to us. If your application meets the credit risk criteria, approval is typically completed within hours and you can get your loan within 24 hours of the application

Other Information

Every business is of a different financial standing and health.  We will perform a comprehensive credit assessment before providing you with a tailored loan package.

There are many variables that contribute to a poor credit score. As long as you are not currently under any litigation or bankrupt, we are always happy to explore how we can assist.

The basic criteria for a loan with us is that your business must:
  • have been in operations for at least 10 months at the point of application
  • be a private limited company or LLP
  • have an annual revenue of at least $100,000
If you do not meet the above but have a great business idea, do share it with us too.
We are excited to explore how we can work together.

Your loan application can be declined if a lender doesn’t think you can afford to repay the loan, either because you don’t earn enough or the lender can’t verify your income with the information you provided…. Your loan application may be declined if it doesn’t look like you’ll be able to take on new debt.

Be it for a new startup or a growing business, additional finance can help keep your business momentum up. You can avail a business loan from FRcapital for your short or long term financial needs to avoid any form of working capital fall short or any timely opportunities that come along your way.

The business turnover ratio measures the proficiency of a business with which it effectively collects their receivables or the credit it has extended to its customers.
To know how to calculate business turnover ratio, the total amount receivable from customers at the start of the accounting period must be added with the ending balance and divided by 2. The business turnover ratio is calculated by then dividing the total sales on credit by the average balance(excluding the cash receipts).

To be eligible for business loan, the business must have incorporated for at least 3 years and must have filed Income tax for a minimum of 1 year. Also, a good business loan turnover ratio gives a positive reflection of business growth and profitability, making it a good profile for business loans.

Credit Bureau Singapore. You can request a copy of your credit file online, at any of the SingPost
branches, at the Credit Bureau office or at CrimsonLogic Service Bureaus. Prices reflected below are accurate and current: CBS Credit Report is chargeable at $6.42 (inclusive of GST).

We take your privacy very seriously.

Firstly, your contact details (company name, director’s name and number) will only be shared with
relationship managers who are interested to finance your business loan request.