The Working Capital Loan (WCL) is a non-collateralized facility under the Enterprise Financing Scheme, capped at S$500,000 per borrower. A Business Term Loan (BTL) is a separate non-collateralized term facility that may be used to raise additional financing, depending on the company’s requirements and financial profile.
Depending on the business’s funding requirements, financials and borrowing capacity, both facilities may form part of an overall financing strategy.
Side by side comparison
SME Working Capital Loan
- Under the Enterprise Financing Scheme, with government risk-sharing
- Non-collateralized
- Personal Guarantee: Even though no collateral is needed, banks will require company directors or major shareholders to sign a personal guarantee. This means personal assets may still be at risk if the business defaults.
- Capped at S$500,000 per borrower
- Tenor up to 5 years
- No early repayment penalties, providing full flexibility for business owners
Business Term Loan
- A non-collateralized term facility
- Personal Guarantee: Even though no collateral is needed, banks will require company directors or major shareholders to sign a personal guarantee. This means personal assets may still be at risk if the business defaults.
- Early repayment penalties may apply, depending on the lender and facility terms
- May be considered after the company’s WCL quota has been exhausted
- May also be structured alongside a WCL depending on the company’s funding requirements and financials
Why the combination matters
The WCL has a maximum cap of S$500,000 per borrower. However, a business’s funding requirements may exceed that amount.
Where a company requires additional financing beyond its available WCL quota, a Business Term Loan may provide another financing route, subject to what the company’s financials and borrowing capacity can support.
In some cases, both facilities may also be considered as part of the overall financing strategy. The right approach depends on what the funding is needed for, the company’s existing financing facilities, its financial profile and how individual lenders assess the case.
Getting the financing structure right is therefore not simply a matter of choosing one product over another. It involves assessing the company’s overall requirements and determining which financing routes may be suitable.
Which do you need?
That is not always the first question to ask.
The better starting point is what the money is for, how much financing the business requires and what the company’s financials can support. The appropriate facility or combination of facilities follows from that assessment.
A business may qualify for one facility, both facilities or neither, depending on its individual profile and the lender’s assessment.
See our financing options, or learn more about how business borrowing capacity is assessed in Singapore.
Talk to us about your case
Every business has different financials, funding requirements and borrowing capacity. The most practical way to determine which financing route may be suitable is to assess the business’s overall profile.
Let us know your company name, approximately how much financing you are looking for and what the funds are intended for. We can then assess the case and determine which financing options may be worth exploring.
Speak to us, or learn more about how our process works.
