Financing Facilitation Products

1. SME Working Capital Loan (WCL)

At the Singapore Budget 2016, the Finance Minister announced a new loan scheme, the SME Working Capital Loan (WCL), to support viable SMEs that may have cash flow concerns or wish to continue growing their business for a period of three years.

Local SMEs can apply for loans of up to S$300,000 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

The Micro Loan was developed in conjunction with SPRING Singapore, aiming to give SMEs access to funding for expansion. Aimed at companies in early growth stages, the Micro Loan is unsecured; it gives your SME financing without requiring you to use assets or resources as collateral.

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

Get capital for purchase of fixed assets or to improve cashflow and optimize daily operations with a collateral-free term loan. With a fixed monthly repayments over 5 years and a cap of SGD $500,000 on the loan amount, you have room to grow as well as the funding for your expansion.

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

When it’s time for the next step in your business growth with a property purchase, a commercial property loan can help ease the burden of capital required for your investment. From warehouses to office units and retail spaces, commercial property loans can finance up to 80% of the purchase price or market valuation of your commercial property.

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

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

Convert your receivables to cash and improve your cashflow with a factoring facility. The bank or financial institution pays you up to 90% of the value of your invoices and credit notes and takes over collection duties when these payments are due. As an added bonus, some factoring facilities give you up to 100% credit protection against buyer default, which can happen due to buyer insolvency or inability to pay.

7. Machinery & Equipment Financing

All too often, you have to spend money to make money. This is usually the case when it comes to buying fixed assets for your business operations, such as equipment, machinery and commercial vehicles. With machinery and equipment financing, you can acquire fixed assets with up to 90% of your required capital covered under a term loan or hire purchase. This takes a massive chunk out of the capital required upfront, making it a lot easier for you to invest in your company’s future growth. The loan tenure can be up to 7 years, at flat interest rates for a 90% financing loan.

8. Floor Stock Financing

This secured revolving credit facility is tailored to the short-term financing needs of auto dealers. It makes use of existing floor stock to secure the facility, and allows business owners to free up cash tied up in their inventory with financing of up to 90% for a maximum of 90 days.

9. Project Financing

For large-scale projects in infrastructure, utilities, as well as oil and gas, capital isn’t the only thing you’ll need. You’ll also require financial advisory services, arranging and structuring of debt, and structured financing solutions such as export credit agency financing. This is where a comprehensive project financing solution comes in to help you keep your costs and financial planning under control.

10. Private Funding

Perhaps loan facilities are not feasible because you need a short-term facility of 3 to 12 months, or cashflow optimization just isn’t enough. You have another option: private funding. For incorporated companies, B2B funding provides financing backed by independent investors. This is debt financing with terms shorter than the standard 24–48 months or more required for financing facilities from banks. Financing can arrive as early as 5 days after an on-site visit, if we have all the documentation we need and your financing is approved. That’s great news for busy entrepreneurs who need to expand in a hurry, and even better news for your business growth.

11. Overdraft

Sometimes, timing is just against you. Clients are late with payments, you just spent a large amount of capital on expansion, and suppliers need to be paid. While you may not want to commit to a loan, there are other solutions that can see you through times of tight cashflow colliding with overdue client invoices.

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.