- SMEs can look to their commercial properties for additional cash flow through refinancing, tapping their equity values for cash-out and a standby overdraft facility
- UOB is committed to helping SMEs meet all their cash flow needs through attractive property refinancing packages and overdraft facilities
3 mins read
In the current COVID-19 climate, managing cash flow has become an even more pressing issue for SMEs. The Singapore Government has stepped in with multiple support measures to help SMEs, such as deferring principal-loan repayments1 and providing 75 per cent wage subsidies2. At the same time, businesses continue to seek other ways to obtain more liquidity and maintain business continuity.
One source SMEs should consider – but may not be aware of – is their existing business properties. Here are three ways SMEs can tap their business property loans for additional cash flow.
The payments on your commercial property are likely a significant monthly cash outlay for your business.
Refinancing is one way to positively impact your business’s cash flow, and you may even be able to refinance at a lower rate – lowering your interest costs – or extend your loan tenure, which would decrease both the monthly principal and interest payments.
Before you decide to refinance your commercial property, check the current terms and conditions to see whether your lock-in period has expired (to avoid any penalty fees). At UOB, we are offering SMEs an all-time-low interest rate package when they refinance their business and commercial property loan with us.
You can enjoy greater cost savings, a low interest rate and one-day approval.
All properties can build equity value, which is defined as the difference between its market value and total outstanding loan. And with the commercial property market in Singapore expected to remain resilient3 after a strong 2019 performance4, there is a good chance that many SMEs’ commercial properties have now built up significant equity value.
That equity value can be used as collateral to unlock immediate cash. This also applies to properties that have been fully paid up previously.
You can opt for cash-out refinancing – this form of refinancing, instead of refinancing only the outstanding value of your loan, allows you to also refinance the equity-value portion. Upon refinancing, you would receive additional cash – which you can use for your everyday business needs.
At UOB, we allow you to refinance up to 100 per cent of your property’s current value.
SMEs may not always need a one-time lump sum cash-out. If your cash requirements are ad-hoc in nature, you can consider using the equity value in your property as collateral to obtain an overdraft facility. With a revolving credit limit, you only pay interest on the amount you use, when you use it (calculated down to the number of days required).
Hence, unlike a traditional loan or cash-out refinancing, you only tap the overdraft facility as and when you need additional cash to ease immediate cashflow.
You only need to pay interest when you draw down on this line, and there is no fixed repayment period or additional approvals required after the initial facility is approved. The facility’s outstanding balance will automatically be replenished each time you repay the principal, making it a flexible source of additional cash flow.
With UOB, you can apply for an overdraft line in just five minutes.
Let UOB help you boost your business’s cash flow
At UOB, we are committed to helping our SME customers get through this challenging time. If you are an SME with at least one commercial property, or have existing fixed deposits and want to boost your near-term cash flow, we can help. Either apply directly for property refinancing or an overdraft facility online, or get in touch with one of our SME loan specialists to learn more.