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How to Find the Best SME Working Capital Loan in Singapore?

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If you are a business owner operating in Singapore within the SME field, there is a huge chance that you know about an SME working capital loan. An SME working capital loan can help with many issues and concerns that come with running a business.

What is an SME Working Capital Loan?

An SME working capital loan is a government-assisted financing service under Enterprise Financing Scheme EFS WCL, which help businesses seeking capital funds. Enterprise Financing Scheme EFS WCL of Solidarity Budget 2020 helps every SME access capital financing until 31 March 2021. Under the enhanced SME working capital loan of Solidarity Budget 2020, any Singapore business can access up to $1M to finance cash flow needs.

The limit for SME working capital loans is $1M until 31 March 2021. Enterprise Singapore, a government institution working as partners with PFIs (Participating Financial Institutions), fuels this scheme with up to 90% risk-sharing.


Which Financial Institutions are Participating in SME Working Capital?

Here are Participating Financial Institutions (PFIs) scheme partners, business company, moneylenders, and banks operating in Singapore for borrowers’ SME capital needs:

  • DBS
  • Ethoz Capital
  • CIMB
  • IFS Capital
  • Maybank
  • Orix Leasing
  • OCBC
  • RHB
  • Standard Chartered Bank
  • Hong Leong Finance
  • HSBC
  • UOB
  • Sing Investments & Finance
  • Singapura Finance

Check these companies, institutions, and banks for scheme details relevant to your business capital needs. You may send them an email indicated on their respective websites for more details on their products and funding services.


How Much Can You Borrow?

Originally, SMEs can borrow $300,000, but the financing limit for an SME working capital loan that SMEs can borrow from Participating Financial Institutions went up to $1M more until 31 March 2021. Enterprise Singapore, a government institution, adds up the SME working capital loan amount borrowed by SMEs from PFIs. If the sum is less than $1 million, an additional working capital loan can be approved by financial institutions and the government based on the remaining $1 million amount.

The application process with financing institutions and banks includes eligibility criteria for approval to access their financing services and features for your capital needs. Here are the requirements for Enhanced SME Working Capital Loan eligibility assessment with PFI partners:

  • Local business/SMEs registered and operating physically in Singapore (at least 2 years for some PFIs)
  • Group annual sales less than $100 million/equal to $S 100M or group employment size less than 200 employees /group employment size 200 total employees in the company
  • Minimum 30% ultimate ownership shareholdings held by Singaporeans or Singapore PR s (at least 30 local sharings percentage)


Things to Consider when Choosing a Loan

Together with terms and conditions, a business company registered and operating locally should consider these other basic features, regardless of the chosen financing service/company for an SME working capital loan. Remember the purpose of borrowing, whether for cash flow needs or expansion of your SME business company.

1. Loan Amount

The SME working capital loan limit is $1 million for your capital needs. Fill up your application process with an SME working capital loan quantity that your business company is confident with repaying in the future. Defaulting on your SME working capital loan can result in seizing assets as collateral or lawsuits from money lending institutions and banks.

2. Loan Tenure

It refers to the length of your repayment period, starting from the approval of loans. Compare this with your existing plans and schedule for you to strategize the repayment process. Loans have several loan tenure options (ex. 6 months, 2 years, 5 years, etc.). In enhanced SME working capital loan, this can last up to 5 years of the repayment period, with principal deferment option up to 1 year subject to assessment. Longer loan tenures also entail additional interest rate accumulation.


3. Fees and Charges

SMEs and other business company owners focus more on the interest rates for different financing services offered by moneylending institutions for working capital needs. However, there are other fees and charges in the process of these funding institutions and banks, aside from the interest rate. 

  • Processing Fee

    • Charged as a percentage of the total loan; a high enhanced SME working capital loan acquired equals a high fee
    • Charged as labor compensation by financing institutions and banks for assessing SME working capital loan application approval, risk assessment, and credit assessment
    • Rate range: 1% – 3% of principal; 4% – 5% for P2P crowdfunding platform lenders
  • Account Maintenance Fee

    • Maintenance fee of credit facilities with banks and other financing institutions
    • Rate range: $500 – $3,000 for most line limits below $1M
  • Credit Insurance Fee

    • Paid to third-party credit insurers for credit facilities requiring separate insurance coverage
    • If the SME’s credit facility is applied under the Loan Insurance Scheme of Enterprise Singapore, a government institution, they will be assisted by the government with a portion of their credit insurance premium
    • Example: annual credit insurance fee: 0.75% – 1.5% of the credit line of trade finance credit facility
  • Legal fees

    • Found in complex loan facilities, secured types requiring collateral
    • Rates range: $2,500 – $5,000, depending on loan quantity and complexity.
  • Early Repayment Penalty Fee

    • Compensation to banks’ interest rate income loss
    • Usually, banks have prepayment penalty fees between 2% – 5% of the total principal, depending on their terms
    • Some banks charge the original loan principal instead of using the redeemed and outstanding principal. (Ex. With a 5-year tenure, repaying after 2 years will charge you an early repayment penalty fee that includes the total loan of the 5 years tenure, rather than using the remaining principal within 3 years.)
  • Banking Fee

    • Banks with SME financing solutions might require opening a bank account with them for disbursement of the approved SME business financing service and the loan repayment.
    • Some banks require a monthly minimum balance, with fees for dropping below the minimum.


4. Processing time

It is fast with institutions and banks. It ranges between 15 minutes to 3-5 business days, each request subject to assessment. If your enhanced SME working capital loan is approved, you may acquire cash for your capital needs on the approval date. Some banks offer inquiry for capital loans through email or online forms.


Compare through Loan Advisor

Loan Advisor is a reputable loan comparison site that helps borrowers access financing solutions, rates, and types of services offered by moneylending companies. With regular information updates, borrowers receive the same information when they transact personally or through email/online methods at the financing company of their choice. They also provide loan type and moneylender lists if you seek a specific loan type or moneylender. For example, Hong Leong Finance has fixed interests as low as 1.68% per annum.


What’s the Best Interest Rate for an SME Working Capital Loan? 

The SME working capital loan interest rate is set by financial institutions’ SME working capital loan scheme terms. Interest rates range between 3.75% – 7.5% yearly, with risk assessment and credit assessment finalizing the interest rate. 



An SME working capital loan can greatly help a business: working out more capital funding, continued manufacturing of products, and enterprise expansion for more reach. However, several things help with working out your enhanced SME working capital loan application form: the loan details, terms and conditions, and interest rates between financing institutions. Remember the SME working capital loan eligibility criteria and business documents.

Suppose your local business is registered and operating physically in Singapore, group annual sales less than $100 million/equal to $S 100M or group employment size 200 total employees or less, minimum of 30% ultimate ownership shareholdings held by Singaporeans or Singapore PR s (at least 30 local sharings percentage). In that case, it is eligible for approval and disbursement of capital funds. Apply to increase your capital, and inquire personally or through email of the respective PFI office.

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