When it comes to small and mid-sized enterprises, they can now manage their money through business banking services provided by most banks. Such services come in the form of corporate banking and help SMEs maintain sufficient cash flows to meet their daily operations. They also help a startup and small business to save money on interest, bank charges, payroll taxes, and late-payment penalties.
As an SME, you can take advantage of business banking services in the following ways:
Your small business may very likely need funding for its everyday operations or fulfil short-term obligations. With an appropriate funding model, you can grow your business. Here are some common ways banks help you with business funding.
SME Working Capital Loan
You may need a working capital loan to meet your business’ day-to-day operations, like paying salaries, rent, utility expenses, and creditors. You can find banks offering SME working capital finance in several ways like:
- Venture Debt Financing: A startup or an early-stage company can avail of venture debt financing from banks, which offer it as a substitute for venture equity financing. You can use venture debt to grow your business, reduce the cost of financing, extend cash runway, and minimize equity dilution.
- Business Loans: Short-term business loans are meant for expanding your business or meeting operational expenses. Depending on your eligibility, you can avail of this loan at a flexible repayment schedule ranging from 1 year to 5 years.
- Block Discounting: It is a revolving credit facility offered to SMEs, especially auto dealers. This type of business financing allows you to get loans against your future income. Credit companies or auto dealers finance their customers through hire-purchase agreements. They may need funds for everyday operations as their funds are tied up in hire-purchase agreements.
- Business Recovery Loans: SMEs can go for a Business Recovery Loan, which may be a Temporary Bridging Loan or an SME Working Capital Loan offered at a competitive interest rate and a flexible repayment schedule of 1-5 years.
- Overdraft: Banks offer overdrafts to SMEs, which help them withdraw money as they need for growth. With this, you can save on interest, for you pay only for the amount you have used.
- Supply Chain Finance: An SME supplier can get paid early with this option, while the buyer can pay later lengthening the payment terms. For instance, DBS is renowned for its Supply Chain Finance programs, which include supplier finance and buyer finance.
SMEs face several complexities and challenges in managing and growing their businesses. Many banks have in their business banking services revolutionary digital payment solutions fulfilling the particular needs of SMEs. Your small business can optimize its operations through online payments, which are fast, secured, efficient, and user-friendly. For instance, DBS offers SMEs digital payment solutions like:
- FAST: Customers can make instant funds transfers in Singapore dollar (SGD) from one bank to another anytime through DBS IDEAL.
- PayNow Corporate: With this, a business account holder can make and receive payments in SGD instantly. All you need to do is to publish your Unique Entity Number (UEN) and receive payments in your bank account or use the QR code to pay your creditors.
- GIRO Payroll: You can pay your employees through GIRO Payroll without any need for carrying cash or writing cheques.
Digital innovations in improving digital payments have enabled banks to help SMEs have more potential buyers for their products or services. How about managing your collections on a single platform with multiple payment options? The MAX Portal from DBS helps your small business to:
- Go cashless quickly without any new integration or terminal
- Reconcile with Cards, PayNow, PayLah! and QR transactions
- Get more customers owing to multiple payment methods on QR codes and mobile wallets
- Easily manage your business requirements with a self-served platform
- Make informed decisions through transaction analysis generated via reporting tools
DBS IDEAL offers a single-terminal payment solution to small businesses using MasterCard, Visa, UPI, and JCB payment methods. The portal also helps you to customize your payments and generate and view the consolidated settlement report.
SMEs can also choose to have insurance with comprehensive standard coverage. You can customize it with add-ons depending on your business needs.
When your business is a startup or in an early stage, you may need a working capital loan like debt financing, and as it grows, you may need business loans or overdraft to expand. Similarly, other business banking services like payment and collection solutions also play a crucial role in helping SMEs achieve their business and financial goals.