Compare Business Credit Lines

Revolving facilities for flexible cash flow management. Draw as needed, pay interest only on what you use.

0-12% Rate range p.a.

60 days Interest-free option

S$500k Max credit limit

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How much do you need?

S$50,000

S$10,000 S$300,000

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Editor's NotesOptional background reading — skip if you just want the comparison

A lot of Singapore SME owners still compare working capital financing as if the only thing that matters is the headline rate, which is usually how a term loan wins on paper and loses in real life.

Working capital is rarely a one-and-done expense. Payroll lands every month, suppliers want payment before your customers pay you, festive stock builds happen in bursts, and GST does not wait for your receivables to clear. That pattern is exactly why more SMEs are leaning toward a business line of credit instead of a fixed term loan.

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The latest local survey data points in that direction. The Singapore National Business Survey 2025 found working capital loans were the most used financing source, tapped by 46% of respondents. Term loans sat at 36%, level with trade financing. On its own, that gap is not enormous, but it is wide enough to suggest businesses increasingly want funding that matches day-to-day cash flow rather than a single lump sum.

A line of credit does that better than a term loan because the structure is simpler than lenders sometimes make it sound. You get an approved limit, say S$100,000, draw only what you need, repay when cash comes in, then draw again. For a distributor covering a six-week inventory gap, that reuse feature matters more than shaving one percentage point off a headline rate.

With a term loan, the money arrives all at once and the repayment clock starts immediately on the full amount. Borrow S$100,000, and you start paying interest on S$100,000 even if S$40,000 sits untouched in the account while you wait for supplier invoices or payroll dates. I have seen owners focus on the advertised rate, then realise they borrowed too early and paid for convenience they never fully used.

That is where the cost comparison gets more interesting. Revolving facilities in Singapore often sit around 6% to 10% a year, though some lenders price credit lines and overdrafts closer to 8% to 12%. Unsecured term loans can look cheaper at roughly 4% to 8%, or around 7.5% to 9% on an effective rate basis in many real offers. The gap is real, just not as decisive as it first appears.

If you draw S$30,000 from a S$100,000 line for two months, you pay interest on S$30,000, not the full approved limit. That is a very different outcome from taking a S$100,000 term loan because you might need it eventually. Even at a slightly higher rate, the total dollar cost can land lower simply because you did not overborrow.

There is a catch, and lenders do not always foreground it. Some revolving facilities charge an unused line fee, usually around 0.5% to 1% a year on the undrawn portion. On a S$100,000 facility with S$70,000 sitting unused, a 1% fee is S$700 a year, about the cost of a month of basic bookkeeping software plus payroll processing for a small firm. That is not trivial, but it is usually still cheaper than paying full loan interest on money you never needed to draw.

Speed helps too. A revolving line is often easier to justify for short-term operating needs because the lender understands the use case immediately: supplier payments, payroll bridging, inventory purchases, invoice timing. When cash is tight on a Thursday and salaries go out next week, approval speed matters more than theoretical savings spread across three years.

That does not mean term loans are obsolete. They still fit best when the spending is fixed, defined, and unlikely to recycle. Equipment purchases are the obvious example. A S$80,000 machine has a known price, a renovation has a scoped budget, and both create an asset or business improvement that should be repaid steadily over time. In those cases, locking in a structured repayment schedule usually makes more sense than keeping a revolving facility open.

Linkflow Capital’s April 2025 SME Financing Accessibility Survey, based on more than 2,216 platform users, found average SME borrowing costs reached 8.47% a year in 2024. With funding costs sitting around the price of a junior staff laptop every few months on a S$100,000 loan, structure matters more than ever.

For most Singapore SMEs, the better question is not which product advertises the lower rate. It is which one lets you borrow closer to the moment you actually need the cash, then stop paying once the gap closes. On that test, a business line of credit usually wins working capital, while term loans still earn their place for equipment and renovation bills that arrive once and stay put.

Lender	Product	Limit	Term	Rate	Fees	Speed	Action
DBS Bank	Business Overdraft	Up to S$500,000	12 months	4.3%–8.0% p.a.	None	5-10 days	Details
OCBC Bank	Revolving Term Loan	Up to S$200,000	12 months	8.9%–12.0% p.a.	1% admin	3-5 days	Details
GXS Bank	FlexiLoan Biz	Up to S$150,000	12 months	5.0%–15.0% p.a.	None	1 days	Details
Funding Societies	Revolving Credit Line	Up to S$100,000	12 months	1.0%–2.0%/mo ≈12%–24% p.a.	3% admin	3-5 days	Details
Aspire	Payables Credit Line	Up to S$300,000	60 days	0.0%–0.0% p.a.	2% admin	1 days	Details

Credit Lines vs Term Loans

A term loan gives you a lump sum once, then you repay it on a fixed schedule. That works well if you know exactly how much you need. A line of credit works on a draw, repay, reuse basis within an approved limit — and for many Singapore SMEs managing payroll gaps and late payments, that ongoing access matters more than chasing the lowest advertised rate.

Factor	Credit Line	Term Loan
Disbursement	Draw as needed, up to limit	Lump sum upfront
Interest	Pay only on drawn amount (typically 6–10% p.a.)	Pay on full principal (typically 4–8% p.a.)
Repayment	Flexible (revolving)	Fixed monthly instalments
Approval speed	Some fintech lines in as little as 7 days	Bank term loans often 2–6 weeks (~33 days avg.)
Best For	Variable cash flow, seasonal needs, late receivables	Equipment, renovations, second-location build-outs

Some banks charge an annual line fee of 0.5–1% even if unused; others (including some OCBC and Aspire facilities) charge only when you draw. Read why more SMEs are choosing credit lines →

Types of Credit Lines

Bank Overdraft

Traditional revolving facility linked to your business account. Draw by going "negative" in your account.

Typical rate: Prime + 2-4% (~6-8% p.a.)

Limit: Up to S$500k

Revolving Credit

Separate credit facility you can draw from. OCBC and UOB offer these with 6-12 month terms.

Typical rate: 8-12% p.a.

Limit: S$100k-S$200k

Fintech Payables Line

Aspire offers up to 60 days interest-free. Pay suppliers via their platform, repay within 60 days.

Rate: 0% for 60 days

Limit: Up to S$300k

Frequently Asked Questions

Do I pay interest if I don't use it?

Most credit lines charge interest only on the drawn amount. However, some banks charge an annual "line fee" (typically 0.5-1% of the limit) regardless of usage.

Can I increase my limit later?

Yes, most facilities can be reviewed and increased after 6-12 months of good repayment history. This requires a new credit assessment.

Is Aspire's 60-day interest-free really free?

There's typically a small admin fee (~2%) per draw. If you repay within 60 days, no interest. If you extend beyond 60 days, fees apply.

What's the difference between overdraft and credit line?

An overdraft is tied to your bank account and accessed by spending beyond your balance. A credit line is a separate facility you actively draw from.