Financing Facilitation Products
1. SME Working Capital Loan (WCL)
Local SMEs can apply for loans of up to S$600,000 under this scheme for loan tenure of up to five years. The interest rate is subject to assessment of risks involved.
To help SMEs access the working capital loans, SPRING shares the risk of loan defaults with Participating Financial Institutions (PFIs) in the event of company insolvency.
Companies applying for the SME WCL should meet the following criteria:
- Company registered and operating in Singapore
- At least 30% local shareholding
- Annual sales ≤ S$1m or ≤ 10 employees
- Group annual sales of ≤ S$100m or group employment size ≤ 200^
2. Micro Loan
At a maximum of SGD $100,000 for four years and interest rates from 5.5% p.a., the Micro Loan allows you to enhance your cashflow with ease. In addition, a fixed monthly repayment schedule means you can plan your operations and finances more effectively.
To qualify for the Micro Loan, a company must fulfil the following conditions:
- Incorporated in Singapore with at least 30% local shareholding (Singaporean or Permanent Resident)
- Employs no more than ten employees, or has an annual turnover of SGD 1 million or less
3. Business Term Loan
As the business term loan is an unsecured loan that doesn’t require collateral, you don’t have to use your assets as collateral – instead, you can use your assets and resources to take your company to the next milestone.
4. Commercial Property Loan
You can also choose a fixed or floating interest rate, with loan tenures as long as 25 years. Commercial property loans can also be packaged with overdraft and trade facilities, which help stabilize your daily cashflow while your property investment works for you.
5. Import Financing/ Letter of Credit
Having a letter of credit puts your suppliers at ease. It works the other way too, as you can ensure payments from your trade accounts are only approved after your supplier’s documentation has been checked by the bank or financial institution issuing your letter of credit. These are a few of the most common types of letters of credit:
1) Sight Letter of Credit: This is used when you want the issuing bank to honour the payment at “sight”, i.e. payment will be made once the documentation received is verified and approved.
2) Usance Letter of Credit: This type of letter of credit means that the issuing bank will accept the draft once documentation received is verified, and will also pay on the maturity date
3) Red Clause Letter of Credit: Often used in manufacturing industries, this type of letter of credit authorizes the issuing bank to make partial advance payment to the seller when documentation is received.
4) Transferable Letter of Credit: Frequently used by middleman traders who do not have any credit facilities. The issuing bank will transfer an Export Letter of Credit in favour of the ultimate seller at the middleman’s request. The middleman trader will then sell the goods under the Export Letter of Credit.
5) Back-to-Back Letter of Credit: For middleman traders with a credit facility, the purchasing party’s bank backs the issuance of an Import Letter of Credit, under a master Export Letter of Credit. After that, the revenue from the master Export Letter of Credit is used to pay the bank under the Import Letter of Credit.
6) Standby Letter of Credit: This type of Letter of Credit is commonly used to assure that payment obligations or contractual performances will be fulfilled. Another common option for this trade function is a Banker’s Guarantee.
Import Financing
Trade cycles can deal a heavy blow to your cashflow if your financial planning isn’t optimized. With import financing, you can customise your import financing facility so that it works with your trade cycle and not against it. The issuing bank or financial institution pays for your purchase of goods and supplies first, allowing you to have an improved cashflow.
6. Factoring
7. Machinery & Equipment Financing
8. Floor Stock Financing
9. Project Financing
10. Private Funding
11. Overdraft
An overdraft facility allows you to pay your suppliers and vendors even if you don’t have the available balance to do so, making sure that you keep your trade partners happy while waiting for your invoices to be paid.
Apart from helping you manage sudden spikes in demand for cashflow, an overdraft facility also benefits your business because unlike a loan, you don’t pay any interest on what you don’t use. This keeps your costs and cashflow under control and helps daily operations flow smoothly too.