SME Spotlight

New OCBC loan gives SMEs flexibility

Businesses can draw down, repay and redraw up to $200,000, with no early repayment fee

A new loan from OCBC Bank for small and emerging businesses offers flexibility and cost effectiveness.

The OCBC Business Revolving Short Term Loan, which was launched on Jan 2, offers funding of up to $200,000 and is tailored for small and emerging businesses that have been in operation for at least two years and need cash flow financing from time to time.

Business owners can draw down, repay and redraw from this line of credit, giving them a readily available source of cash. Repayment is also flexible as there is no early repayment fee.

Since the soft launch last November, more than $6 million in loans have been approved.

According to the 2017 SME Financing Survey conducted by Spring Singapore in partnership with Dun & Bradstreet, three in five small and medium-sized enterprises (SMEs) face delays in receiving payments from customers.

The SMEs surveyed also continued to rank delays in customers' payments as their top finance-related concern. This same concern was echoed by SMEs that participated in the 2017 Development Survey by DP Information Group.

But with a more positive outlook, given that the Singapore economy grew 3.5 per cent last year, SMEs may also need additional working capital.

For SMEs looking to ramp up their businesses, the loan's extra cash injection will allow them to hire more manpower, buy more supplies or even expand overseas.

Ms Christie Chu, OCBC's head of emerging business, global commercial banking, said: "With one in two businesses banking with us, we know the needs of small businesses intimately. Having enough and even extra cash on hand is critical, as many of these businesses go through an up-and-down cash cycle dictated by external factors such as seasonal trends and economic conditions. There might, therefore, be an urgent need for cash at any point in time."

First Gourmet, which owns brands such as Zaffron Kitchen, Zaffron Banana Leaf, Prata Wala and Ottoman Kebab & Grill, is one customer that took up the loan during its soft launch.

First Gourmet director Joseph Lee said: "This loan will provide extra funding for our business whenever the need arises. For instance, it is now the peak season for the F&B (food and beverage) industry, with Chinese New Year around the corner, so we will need more working capital.

"We are also investing in activities such as franchising and going international. The loan offers the flexibility of an overdraft but at a lower interest rate, which is why we signed up for it."

A version of this article appeared in the print edition of The Straits Times on January 17, 2018, with the headline 'New OCBC loan gives SMEs flexibility'. Print Edition | Subscribe