With Singapore’s strong and diverse economy, low taxation, first-rate infrastructure, and elevated quality of life, private and business investors invest with confidence.
Circumstances and demands in any business may change dramatically in these unpredictable times. A bank overdraft is a contract with a bank that permits the bank to advance funds over a client’s available balance at any time. With this facility, SMEs can obtain more amounts of money than what their bank accounts holds. Customers can repay their loans gradually since the bank charges interest on the money overdrawn. In short, a bank overdraft is a dependable source of funding for companies.
Small and medium-sized business owners who frequently face sudden financial difficulties could think about taking out a business overdraft as a means of getting out of difficult circumstances.
How is interest on an overdraft calculated?
The term “overdraft interest” refers to the interest charged on either (a) the amount overdrawn which is subject to the lowest charge of S$20 for personal accounts or (b) the overdraft amount used for accounts that have an overdraft facility which is subject to a minimum charge of S$10.
Cheques that are received after the time of deposit will be considered for interest calculations starting on the next clearing date.
The indicative exchange rate as of the final working day of a given month is the one that is quoted, if any.
Any transactions completed after the deadline for printing statements will appear in the statement of account for the following month.
For instance, DBS Bank in Singapore offers
- Maximum overdraft amount: S$500,000.
- Application deadline: not stated. But to access the overdraft option, you do require a DBS business account.
- What it involves: Secured or unsecured company overdrafts are your options. You pay interest solely on the amount used and have instant access to your money.
Benefits of a Bank Overdraft
Bank overdrafts are a productive way to obtain capital for expanding businesses. Some of the advantages are:
Adaptable financial access
You may access an accessible source of funding whenever you need it with a business overdraft. It enables you to pay for pressing invoices, fill up short-term cash flow shortages, and handle unforeseen costs.
Efficient and practical
In contrast to alternative business financing options, obtaining an SME overdraft is rather quick and simple. Having an authorised overdraft account in place allows you to access cash immediately, which is perfect for responding to unanticipated events or seizing time-sensitive opportunities.
Interest is only charged on the funds used.
Just the amount you use accrues interest when you have a corporate overdraft. In comparison to a set lump-sum loan, this is less expensive because interest is only charged on the actual amount of money borrowed.
Enhanced cash flow control
A bank overdraft for your business serves as a layer of protection, giving you peace of mind during erratic times. You can more effectively handle your cash flow variations, uphold your relationships with suppliers, and quickly take advantage of development possibilities if you have access to additional funds. Obtain more money right away, when you need it most.
Adaptability
Interest is charged when the facility is used.
Easy to Monitor
It helps you conveniently manage your finances.