SME Clinic

Q I run a business manufacturing health supplements and traditional bird's nest.

Often, these manufacturing cycles come with a certain "gap" period where I have to pay my workers and my materials suppliers before I receive payment from my clients.

This is a bigger concern now that I am considering expanding my market reach by having my products sold in retail shops.

My manufacturing output will have to increase to keep up with the expected boost in orders.

I would like to know what my options are, in particular if banks can grant me a loan to keep up with the anticipated increase in my working capital needs.

A It is good to hear that your business is growing and diversifying into other revenue streams.

Banks may be able to support your need to increase your working capital by granting your company various facilities, such as:

• An overdraft, which is a revolving credit facility, applicable for ad-hoc working capital requirements to bridge your financing gap or a seasonal increase in working capital. Borrowers will have to service part of the amount drawn down as well as the interest incurred from the overdraft amount utilised; and/or

• A term loan if you require a lump-sum amount for bulk purchases of stock and to pay the salaries of new workers required for the business expansion. Typically, banks will allow you to repay the term loan over a period of up to three years.

Overall, as it seems that your company requires a bulk cash injection for the purchase of your supplies as well as to bring your products to the retail front, you may want to explore the various term loan options offered by banks.

This would also allow you to plan for a regular repayment of the loan which will help you to manage your cash flow better.

•Ian Teo, head of business banking, Standard Chartered Bank Singapore

A version of this article appeared in the print edition of The Straits Times on March 30, 2016, with the headline 'SME Clinic'. Print Edition | Subscribe