Setting up a business is easy but running it is not easy. You must constantly keep ahead of your competitors and need to innovate in order to stay ahead. Paying wages to your staff on time is another hurdle in these tough times. Despite all the government handouts given to companies in the current pandemic, it’s not enough for businesses to stay afloat.

Business owners will definitely need fast cash to tide them over this tough period as liquidity is an important factor in any business setup. You can get working capital loans in Singapore from banks, financial institutions, and authorised money lenders. 

Definition of Working Capital Loan

A working capital loan in Singapore helps companies to cover it’s short-term operating expenses like monthly salaries, rent, utilities, etc. In order for businesses to be financially stable, it is essential for them to have collaterals that can be converted to cash to cover urgent expenses anytime.

How to Calculate a Working Capital Loan

The simple formula to calculate working capital is Current Assets minus Current Liabilities. Current assets refer to assets that are easily converted to cash within a short period of time e.g. cash in hand, fixed deposits, etc. Current liabilities, on the other hand, are obligations that are to be paid within a year e.g. creditors, bank account overdrafts, etc.

A business‘s health card is the working capital ratio. The typical healthy range is 1.2 to 2.0. Anything below 1.0 indicates that the business is unable to pay its short-term debts (negative working capital zone). 

In order to ascertain how much working capital loan your business can obtain, it will depend on the outcome of all the documents submitted below.

Documents Required for a Working Capital Loan in Singapore

Outstanding debtors List (Optional document. Good to Submit)

This debtor’s outstanding list is also called the accounts receivable aging list. It shows all debtors, how long the debt has been overdue, and of course the clientele. This aging list gives an additional advantage to the borrower as the lender is able to forecast the debt collection in the near future. It also helps to boost the confidence of the lender as he is reassured that the working capital loan will be repaid on time with the incoming cash flow. This report is easily available from your company’s accounting records.

 Corporate Bank Statements

These bank statements will reflect the liquidity level of the company as the lender can view the company’s monthly revenue and expenses.  Lenders are able to assess from the past 6 months’ bank statements whether the company has sufficient funds at the end of the month to repay their working capital loan. Bank statements are easily retrieved from the online bank platforms of your respective banks.


Corporate Financial Statements

Lenders would usually look at the latest 2 years of the company’s financial statements which indicates the company’s financial health status. The common documents are profit and loss statements and balance sheets which will show the present and past performance of the company. These records can be obtained from your auditors or in-house accountant.


ACRA Business Report

This is the birth certificate of your company which is issued by the Accounting and Corporate Regulatory Authority (ACRA). It lists the nature of your business, the company’s paid-up capital and all directors and shareholders. The ACRA report will also assist the lender to make an informed decision on whom to choose as a guarantor if needed. This report can be printed out from the ACRA website.


Latest Notice of Assessment (NOA) of Guarantor/Director

This document enables the lender to assess the financial capability of the guarantor/director to repay the working capital loan apart from determining the loan amount and tenure. This report will be read together with the Credit Bureau Report to give the lender a feel of the total debt to income ratio of the business. This NOA can be printed out from the IRAS website.


Credit Bureau Report (CBR) of Guarantor/Director

This enables the lender to assess the company’s outstanding loans, repayment history, and all existing loans. In a nutshell, it’s the report card of your company’s creditworthiness. Generally, the credit ratings range from AA (the best) to HH (the worst). This report can be printed from the CBS website.


At GalaxyCredit, we offer various types of business loans for all your corporate needs. Our affordable working capital loans in Singapore are offered at competitive rates as they are designed to assist Small and Medium Enterprises (SMEs).