Match the facility to the cash-flow gap. Short-term funding should support inventory, receivables and trading cycles—not become permanent expensive debt.
Overdrafts provide daily flexibility and charge interest only on the amount used, but normally carry higher rates and may require security.
Revolving credit is drawn in fixed short tenors and suits recurring, planned funding. Invoice financing advances cash against unpaid customer invoices, while trade facilities fund specific purchases, imports or exports.
Banks examine six months of account turnover, the cash conversion cycle, receivables ageing, supplier terms, existing CCRIS commitments and DSCR. Trading businesses commonly receive a limit linked to one or two months of revenue.
Use term financing for permanent expansion or equipment. Funding a long-term need with an overdraft is usually expensive and exposes the business to annual review risk.
Prepare SSM records, six months of bank statements, latest management or audited accounts, receivables and payables ageing, tax filings, existing facility statements and a clear explanation of the funding cycle.
It depends on usage. A term loan normally has a lower rate, but an overdraft can cost less for short, fluctuating gaps because interest applies only to the amount used.
Limits are often tied to the cash conversion cycle and turnover. Healthy bank activity, receivables quality and DSCR above 1.25x support a stronger limit.
It is harder without two to three years of records, but invoice financing, collateral and SJPP or CGC guarantees can improve access.
