A working capital loan is designed to support day-to-day operations. Think payroll, inventory, supplier payments, rent, marketing, or bridging the gap between invoicing and collection. For many SMEs, the biggest challenge is not profitability—it is timing. Cash often comes in later than bills go out.
What a working capital loan is (in plain English)
Working capital financing is meant to keep operations stable when cash inflows do not match expense timing. It is not “extra money.” It is a tool to smooth the cash cycle so your business can keep delivering, selling, and collecting.
Signs your business may actually need working capital
Many SME owners apply only when the bank balance is already tight. A healthier approach is to watch for early signals:
- You are growing, but cash is lagging because you must fund inventory or project costs first
- Your customers pay in 30 to 90 days, but suppliers need payment earlier
- You are taking on larger contracts and need cash to execute before you get paid
- Your business has seasonality and you need funding ahead of the peak period
When working capital might be the wrong move
Working capital should not be used to cover a structural problem for too long. Reconsider if:
- Margins are shrinking steadily and there is no clear plan to fix pricing or costs
- You are borrowing to repay older debt repeatedly (this increases risk quickly)
- There is no clear repayment source and cash inflows are unpredictable
How to estimate a comfortable loan size
Instead of asking “What is the maximum I can borrow?”, ask:
- What monthly repayment can I handle even in a slower month?
- What happens if a key customer delays payment by 30 days?
- Do I still have a buffer for payroll and suppliers?
If repayments only work in your best month, the facility is too large.
Choosing a working capital lender that fits your business
Not all working capital facilities are structured the same. Beyond interest rates, consider how different lenders approach fees, flexibility, and speed.
Repayment flexibility matters. Can you repay early without penalty if cash flow improves? Some lenders charge 1-3% prepayment fees or have lock-in periods that penalise early settlement. Others, like Credezo, offer zero early repayment penalty after the first 3 months—useful if you want the option to clear debt faster when business picks up.
Fee structures vary more than most borrowers realise. The traditional model treats processing fees as sunk costs regardless of your payment behaviour. A partnership model rewards responsible borrowing—for example, Credezo offers a 50% processing fee rebate for borrowers who maintain perfect payment throughout the loan tenure. This creates alignment: good behaviour benefits both parties.
Speed to funds can be decisive for time-sensitive opportunities. Traditional banks typically take 2-4 weeks for SME working capital approvals. Alternative lenders can move in 3-5 business days. If you are bridging a gap to execute a confirmed order, that difference matters.
Transparency should be non-negotiable. All costs should be disclosed upfront in a Letter of Offer before you commit. Ask specifically about processing fees, late payment charges, and early settlement terms. Avoid lenders who cannot provide a complete cost breakdown or whose answers feel evasive.
Before signing, ask these questions:
- What is the total cost of the facility including all fees?
- What happens if I pay early—are there penalties or rebates?
- Are there any incentives for on-time payment?
The answers reveal whether a lender sees you as a transaction or a relationship.
Documents that typically help SMEs in Singapore move faster
Lenders commonly assess:
- Company profile details (UEN and basic company information)
- Operating bank statements (often the last 6 months)
- Latest financials or management accounts
- A short note explaining use of funds and how you plan to repay
Key takeaway
Working capital works best when it matches your real cash cycle. The right structure reduces stress and helps you focus on growth, not firefighting.
If you want working capital financing that fits how SMEs operate in Singapore, apply for financing and we will guide you through the next steps based on your business profile.