Small and Medium Enterprises (SMEs) constitute 99% of the business initiatives in Singapore. They are the driving force of the economy. Hence, growing this segment is vital for the overall growth of Singapore’s economy. However, SMEs are finding it difficult to apply for business financing loans to grow their businesses.
What is working capital?
Working capital loan is the key to solving the financing needs for many SMEs. Working capital is determined as current assets minus current liabilities. The difference is accessible to finance the day-to-day business operations.
Current Assets are the available cash and any other liquid assets such as accounts receivable, inventory and expenses paid in advance.
Current Liabilities are the short term expenses such as repayment of finance, salary, rent, tax and accounts payable. Simply put, current liabilities are all payments due within one year.
Working capital can be utilised to improve balance sheets, attain liquidity and enable SMEs to finance their growth.
What is a working capital loan?
Singapore Business Federation’s National Business Survey for 2015/2016, indicated that most SMEs in Singapore have financial difficulties and required financial assistance. 3 out of 5 SMEs contemplated raising capital to grow their businesses.
SPRING Singapore (An agency under the Ministry of Trade and Industry responsible for helping Singapore enterprises grow) launched a S$2 billion loan programme to support SMEs growth over the next 3 years.
Working Capital Loan Programme.
The SME Working Capital Loan Programme offered by 12 participating financial institutions to aid eligible SMEs, provides working capital finance of up to S$300,000. SPRING Singapore co-share 50% of the default risk with banks.
Who is eligible for working capital loan in Singapore?
To benefit from a working capital loan of up to S$300,000, SMEs need to meet specific criteria:
 SMEs must be registered and operating in Singapore with minimum 30 percent local shareholding in the company
 The Company’s annual sales turnover should not exceed S$100 million with staff strength of less than 200.
How to know if the SME meets the requirements for working capital loan?
Before applying for a working capital loan, confirm if the business qualifies for the financing.
Financial Institutions participating in the program can provide the relevant consultation and assistance.
 Audited financial records or certified financial statements.
 Business profile from Accounting and Corporate Regulatory Authority (ACRA).
 Latest Bank statement.
 Income tax assessment of all owners and directors.
Contact the financial institution to enquire about any additional documents needed.
What is the repayment period?
SME Working capital loans provide repayment tenures of up to 5 years.
What is the Interest rate?
The interest rate for working capital loans is subject to the participating bank’s assessment of the risks involved.
A working capital loan provides companies easy access to unsecured working capital financing to help them expand their businesses without the financial burden.
Keywords: SME Working Capital Loan, working capital loans
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