Glossary

The words nobody explains before you are asked to sign them.

Twenty-two terms you will meet in a Singapore business lending conversation, defined in plain English. No rates, no pitch — just what each one means and why it matters to you.

Kinds of facility

What the money itself is called, and how each one behaves.

Unsecured business term loan

A fixed sum lent to a company for a fixed period, repaid in instalments, with no property or asset pledged against it. Because there is nothing to sell if repayment stops, the lender underwrites the company's trading record and usually takes a personal guarantee from the directors instead. Most SME term lending in Singapore is of this kind.

Working capital loan

Borrowing raised to fund day-to-day operations — stock, payroll, the gap between paying a supplier and being paid by a customer — rather than to buy an asset. It is a purpose, not a product: the same facility becomes a working capital loan because of what it funds, and lenders will ask what the money is for.

Bridging loan

Short-term borrowing taken to cover a known gap until a specific, expected inflow arrives — a property completion, a milestone payment, a longer facility being drawn. It is priced for its short life and it depends on the exit being real. A bridge with no identified repayment source is the most expensive way to postpone a problem.

Invoice financing

Raising cash against invoices already issued but not yet paid. The financier advances a portion of the invoice value and is repaid when the customer settles. It converts a receivable into cash earlier, and the financier's view of your customer's ability to pay matters as much as their view of you.

Trade finance

Facilities built around a specific shipment or transaction rather than the business as a whole — letters of credit, trust receipts, import and export lines. The underlying goods and the counterparties form part of the security, so the paperwork follows the trade cycle rather than a fixed monthly instalment.

What the lender asks of you

The obligations and checks that sit behind an approval.

Personal guarantee

A written promise by an individual, usually a director, to repay the company's borrowing personally if the company does not. It survives the company's difficulties: enforcement is against the guarantor's own assets and income. It is the single most consequential document a director signs, and its scope, cap and duration are negotiable terms rather than fixed ones.

Collateral

An asset pledged to a lender that can be sold to recover the debt if repayment fails — property, equipment, a fixed deposit, a charge over receivables. Offering collateral generally widens the range of lenders willing to look at a file, because it changes what happens in the worst case rather than what happens normally.

Debt servicing ratio

A measure of how much of your income or cashflow is already committed to repaying existing debt, expressed as a proportion. Lenders use it to judge whether another instalment is affordable on top of what you already owe. Facilities you have stopped using but never closed still count against it.

Credit grade

A summary of an individual's borrowing and repayment conduct, maintained by Credit Bureau Singapore from data supplied by member lenders. It reflects how you have handled credit rather than how much you earn. Directors' personal grades are part of the assessment for unsecured company borrowing, because the personal guarantee makes them relevant.

Credit enquiry

The record left on your bureau file when a lender examines it in connection with an application. Enquiries are visible to other lenders for a period, and a cluster of them in a short window is read as a signal about the borrower's circumstances. This is the mechanism behind the advice not to apply everywhere at once.

Notice of Assessment

The statement IRAS issues confirming assessed income for a year of assessment. Lenders use it as independent verification of income that does not rely on documents the applicant prepared. For an individual it can be retrieved automatically through Myinfo rather than uploaded.

Reading the offer

The terms that decide what a facility actually costs and when it ends.

Tenure

The length of time over which a facility is repaid. A longer tenure lowers each instalment and raises the total interest paid over the life of the loan; a shorter one does the reverse. It is usually the most effective lever a borrower has over affordability once the rate is set.

Effective interest rate

The rate that accounts for the fact that you repay principal progressively, so you do not have use of the full sum for the full term. It is the figure that allows two offers to be compared honestly, and it is materially higher than a flat rate quoted on the original amount.

Flat rate

Interest calculated on the original loan amount for every period of the term, regardless of how much has already been repaid. It produces a smaller-looking percentage than the effective rate for the same loan. Two facilities can only be compared on the same basis, so convert both to an effective rate before choosing.

Facility letter

The lender's written offer setting out the amount, tenure, pricing, security, guarantees and conditions of the borrowing. It is the contract. Anything agreed verbally that does not appear in it does not exist, and conditions precedent listed in it must be satisfied before the money moves.

Disbursement

The point at which approved funds are actually released to the borrower. Approval and disbursement are different events, sometimes separated by outstanding conditions or documentation. Fee arrangements and timelines are usually written against one or the other, so it is worth knowing which one applies to yours.

Refinancing

Replacing an existing facility with a new one, generally to change the rate, the tenure or the lender. It is a fresh application and is assessed as one, including a fresh look at the bureau file. Any early repayment cost on the facility being replaced belongs in the comparison.

Schemes and the people involved

Who is in the room, and which government support exists.

Enterprise Financing Scheme

Enterprise Singapore's umbrella scheme under which the government shares part of the default risk with participating lenders, making certain SME borrowing possible that a lender might not otherwise write. The lender still makes the credit decision and sets the rate; the scheme changes the lender's risk, not the borrower's obligation to repay.

SME Working Capital Loan

The working-capital facility under the Enterprise Financing Scheme. As published by Enterprise Singapore and checked on 20 August 2026, it allows borrowing of up to S$500,000 per borrower over a maximum repayment period of five years, for an ACRA-registered entity operating in Singapore with at least 30% local equity and group annual sales turnover not exceeding S$500 million.

Participating financial institution

A bank or finance company approved to offer government-supported facilities. Applications for a scheme facility are made through one of them, not to Enterprise Singapore, and each institution applies its own credit assessment on top of the scheme's eligibility rules. Two participating institutions can reach different answers on the same file.

Loan consultancy

An intermediary that assesses a borrower's profile, identifies which lenders' criteria that profile actually meets, prepares the submission and negotiates terms. A bank can only offer its own products under its own rules; a consultancy works across a panel. How it is paid, and by whom, should be visible before you engage one.

Myinfo business

The government service that lets a business or its authorised person share verified particulars held across government agencies with a participating organisation, with consent, instead of uploading documents. It removes transcription errors and shortens the gap between an enquiry and an assessment, because the data arrives already verified at source.

The words nobody explains before you are asked to sign them.

Kinds of facility

What the lender asks of you

Reading the offer

Schemes and the people involved

Read a term in your offer that you are not sure about?