Term Loan, Overdraft Interest and Bridging Loan Singapore 2026
Three calculators covering the credit facilities that keep businesses running and property transactions moving in Singapore. The Term Loan Calculator computes fixed monthly repayments for secured and unsecured business loans with tenures of 1 to 10 years — the workhorse facility for SMEs funding equipment, inventory, and expansion. The Overdraft Interest Calculator reveals the daily cost of drawing on your business overdraft — the most flexible but often the most misunderstood credit facility, where interest accrues daily on the outstanding balance at rates of 6% to 12% per annum. And the Bridging Loan Calculator estimates the short-term financing cost when you are buying a new property before your existing one is sold — a high-stakes gap financing instrument that charges premium rates for 6 to 12 months. Together, these tools cover the three essential credit structures beyond standard personal and mortgage loans.
Understanding Term Loans in Singapore 2026 — How Banks Structure Fixed-Tenure Business Loans for SMEs With Monthly Repayments, Enterprise Singapore Financing Schemes and MAS-Regulated Lending Standards
A term loan is a lump-sum credit facility repaid in fixed monthly instalments over an agreed tenure — typically 1 to 10 years for business purposes. Unlike revolving facilities (overdrafts, credit lines), a term loan has a defined repayment schedule from day one: the borrower knows exactly how much to pay each month and when the loan will be fully repaid. This predictability makes term loans the most popular financing tool for Singapore SMEs.
In Singapore, business term loans fall into two broad categories. Secured term loans are backed by collateral — typically commercial property, equipment, or inventory — and carry lower interest rates (4% to 7% per annum). Unsecured term loans require no collateral but charge higher rates (6% to 12% p.a.) because the bank bears greater risk. The loan amount, rate, and tenure depend on the business revenue, cash flow projections, credit history, and the nature of the collateral.
Enterprise Singapore offers several government-backed financing schemes that reduce borrowing costs for SMEs. The Enterprise Financing Scheme (EFS) provides government risk-sharing of up to 70% on qualifying loans, enabling banks to offer lower rates and higher amounts. The EFS-SME Working Capital Loan covers up to S$500,000 for day-to-day operations, while the EFS-Trade Loan supports import and export financing. These schemes significantly reduce the effective cost of borrowing for qualifying businesses.
The Term Loan Calculator takes the loan amount, annual interest rate (flat or effective), tenure in months, and processing fee. It computes: monthly repayment using the standard amortisation formula, total interest over the full tenure, total repayable amount, and a month-by-month schedule showing principal repaid, interest charged, and remaining balance for each instalment.
Working Capital vs Capital Expenditure — Matching Loan Tenure to Business Purpose
A fundamental lending principle: the loan tenure should match the useful life of what it finances. Working capital loans (for inventory, payroll, or receivables) should have short tenures of 1 to 3 years because the financed assets are consumed quickly. Capital expenditure loans (for equipment, machinery, or renovation) should have longer tenures of 3 to 7 years because the assets generate returns over a longer period. Mismatching — for instance, taking a 7-year loan for a 6-month inventory cycle — leads to cash flow problems and overpayment of interest. The Term Loan Calculator helps compare total costs across different tenures.
Understanding Overdraft Interest in Singapore 2026 — How Daily Interest Accrual Works on Business Overdraft Facilities, Why Banks Charge 6% to 12% and When an Overdraft Is Cheaper Than a Term Loan
A business overdraft is a revolving credit facility attached to your company current account. It allows you to withdraw more than your account balance up to an approved limit — effectively borrowing from the bank on demand. The key feature: interest is charged daily on the actual outstanding (overdrawn) balance only, and you pay interest only on the days and amounts you actually use.
In Singapore, business overdraft rates typically range from 6% to 12% per annum, calculated on a daily rest basis. The formula is straightforward: Daily Interest = Outstanding Balance × Annual Rate ÷ 365. If you overdraw S$50,000 at 8% p.a., the daily interest is S$50,000 × 0.08 ÷ 365 = S$10.96 per day. If you clear the overdraft after 15 days, you pay only S$164 in interest — dramatically less than a term loan where you would commit to months of fixed payments.
This makes overdrafts ideal for short-term, unpredictable cash flow gaps: covering payroll while waiting for receivables, bridging a 2-week gap between supplier payment and customer collection, or handling seasonal demand spikes. However, if you carry a persistent overdraft balance month after month, the cumulative daily interest often exceeds what a cheaper term loan would cost. The rule of thumb: if you need the money for less than 60-90 days, an overdraft is efficient; beyond 90 days, a term loan is almost always cheaper.
Banks typically review overdraft limits annually and can reduce or cancel the facility with notice — usually 30 to 60 days. Unlike a term loan, an overdraft has no fixed repayment schedule; you can repay any amount at any time. However, banks expect the facility to “swing” (go in and out of overdraft) rather than sit at the maximum limit permanently. A permanently maxed-out overdraft signals poor cash management and may trigger a review.
The Overdraft Interest Calculator takes the overdraft amount, annual interest rate, and number of days overdrawn. It computes: total interest for the period, daily interest charge, monthly equivalent cost, and a comparison against a term loan at a lower rate showing the break-even point where a term loan becomes cheaper.
Overdraft vs Credit Line — Similar But Not Identical Facilities
A business credit line works similarly to an overdraft — you draw and repay as needed — but typically operates as a separate account rather than being linked to your current account. Credit lines may have minimum monthly repayment requirements, while overdrafts generally do not (as long as you stay within the limit). Both charge daily interest on the outstanding balance. For most SMEs, the practical difference is administrative rather than financial. Check whether your bank offers a combined facility or separate products.
Understanding Bridging Loans in Singapore 2026 — How Short-Term Property Gap Financing Works When You Buy Before You Sell, the Premium Interest Rates and Typical 6 to 12 Month Tenures for HDB and Private Property Transactions
A bridging loan is a short-term financing facility designed to cover the gap between buying a new property and receiving the sale proceeds from your existing one. In Singapore, where property transactions can take 8 to 14 weeks to complete, there is often a timing mismatch: you need to pay the down payment and complete the purchase of your new home before you receive the funds from selling your current one. The bridging loan fills this gap.
Bridging loans in Singapore typically carry higher interest rates than standard mortgages — ranging from 5% to 6.5% per annum — because they are short-term (usually 6 to 12 months) and carry higher risk for the bank. The loan amount is usually capped at a percentage of the expected sale proceeds (typically 80% of the estimated or agreed sale price). Once your existing property is sold and proceeds are received, the bridging loan is repaid in full — either as a lump sum or from the settlement proceeds via the conveyancing lawyer.
There are two common bridging loan structures in Singapore. Capitalising interest: no monthly payments during the bridging period; interest accumulates and is repaid together with the principal when the existing property sells. This preserves cash flow but costs more in total. Servicing interest: you make monthly interest-only payments during the bridging period, and repay the principal when the property sells. This costs less in total but requires monthly cash outflow.
The Bridging Loan Calculator takes the bridging amount, interest rate, estimated bridging period (in months), and repayment structure (capitalising vs servicing). It computes: total interest cost, monthly payment (if servicing), total repayable, and a comparison between capitalising and servicing structures showing the cost difference.
How These 3 Loan Calculators Work — Term Loan Amortisation, Daily Overdraft Accrual and Bridging Loan Gap Financing for Singapore 2026
The Term Loan Calculator takes the principal amount, annual interest rate, tenure in months, and any processing fee. It uses the standard annuity formula (PMT = P × r × (1+r)^n / ((1+r)^n − 1)) to compute: fixed monthly instalment, total interest over the full tenure, total repayable, and a detailed amortisation table showing each month principal portion, interest portion, and declining balance.
The Overdraft Interest Calculator takes the overdraft balance, annual interest rate, and days overdrawn. It computes: daily interest (balance × rate ÷ 365), total interest for the period, monthly equivalent cost if used continuously, and a term loan comparison showing the interest cost if the same amount were borrowed as a fixed-tenure loan — revealing the crossover point where the overdraft becomes more expensive.
The Bridging Loan Calculator takes the loan amount, annual rate, bridging period, and structure (capitalising or servicing). For capitalising: total interest = principal × rate × months/12, all compounded and repaid at maturity. For servicing: monthly interest-only payment = principal × rate ÷ 12, with principal repaid at maturity. The calculator shows both structures side by side for informed decision-making.
3 Real Singapore Business and Property Loan Examples — S$200,000 SME Term Loan, S$80,000 Overdraft for 45 Days and S$400,000 Property Bridging Loan
Example 1: S$200,000 SME Equipment Term Loan at 5.5% EIR Over 5 Years — Monthly S$3,826
Precision Engineering Pte Ltd borrows S$200,000 to purchase CNC machinery. The loan is secured against the equipment. Rate: 5.5% EIR. Tenure: 5 years (60 months). Processing fee: 1%.
The 5-year tenure keeps monthly payments manageable at S$3,826, well within the cash flow of a company with S$500K+ annual revenue. The CNC machine has a useful life of 8-10 years, so the 5-year loan tenure is appropriately matched. If the company can afford S$6,069/month, the 3-year option saves S$11,061 in interest — worth considering if cash flow allows. Under the Enterprise Singapore EFS scheme, the government shares up to 70% of the risk, which may secure a lower rate. Use the Term Loan Calculator to model different scenarios.
Example 2: S$80,000 Business Overdraft at 8% for 45 Days — S$789 Total Interest vs S$4,171 for a 12-Month Term Loan
FreshMart Trading Pte Ltd, a food distributor, needs S$80,000 to pre-purchase stock for Chinese New Year. Their customers will pay within 45 days. They use their business overdraft facility.
For this 45-day cash flow gap, the overdraft costs only S$789 — because interest stops the moment the balance is repaid. A 12-month term loan at a lower 6% rate would cost S$4,171 in total interest because you are locked into 12 months of payments even though you only need the money for 45 days. This is the classic overdraft advantage: pay only for what you use. However, if FreshMart carried this S$80,000 balance for 6+ months, the overdraft at 8% would cost S$3,200 — approaching the term loan cost. Use the Overdraft Calculator to find your break-even point.
Example 3: S$400,000 Bridging Loan for 4 Months at 5.5% — Capitalising vs Servicing Interest
Mr and Mrs Ng are upgrading from their HDB flat (expected sale: S$650,000) to a condo (purchase: S$1,200,000). They need S$400,000 to complete the condo purchase while waiting for the HDB sale to complete. Estimated bridging period: 4 months.
For a 4-month bridge at simple interest, the total cost is identical: S$7,333. The difference is cash flow: capitalising means zero payments during the bridge but a larger lump sum at maturity (S$407,333). Servicing means S$1,833/month out of pocket but only S$400,000 at maturity. For most families, capitalising is preferred because they are already managing two properties and prefer to defer all costs to settlement. If the bridging period extends to 6+ months (which happens if the HDB sale is delayed), costs rise to S$11,000+. Always budget for a 2-month buffer beyond your expected timeline. Use the Bridging Loan Calculator to model your scenario.
3 Expert Tips for Term Loans, Overdraft Facilities and Bridging Loans in Singapore
Use Overdrafts for Under 90 Days and Term Loans for Anything Longer — The Crossover Point Is Real
The overdraft looks expensive at 8-12% compared to a term loan at 5-7%, but for short periods the daily-rest calculation makes it cheaper because you pay zero interest the moment you repay. The break-even is typically 60-90 days. Beyond that, the higher overdraft rate compounds daily and overtakes the lower term loan rate. Run both scenarios in our calculators before deciding. If your cash flow gap is predictable and recurring (e.g., quarterly supplier payments), consider a revolving credit line with a fixed commitment fee — it combines the flexibility of an overdraft with lower rates.
Budget Your Bridging Loan for 6 Months Even If You Expect 3 — Property Sales in Singapore Often Delay
HDB resale completions require HDB approval, buyer CPF coordination, and lawyer scheduling — delays of 4-8 weeks are common. Private property transactions face similar bottlenecks. If you budget for a 3-month bridge and it extends to 6, your interest doubles from S$7,333 to S$14,667 in the example above. Always model the worst case. Some banks offer bridging loan extensions at the same rate; others increase the rate after the initial term. Clarify the extension terms before signing.
Check Enterprise Singapore Financing Schemes Before Any Business Loan — Government Risk-Share Can Cut Your Rate by 1-2%
The Enterprise Financing Scheme (EFS) offers government co-sharing of credit risk — up to 70% on qualifying loans for SMEs. This means banks can offer lower rates and approve larger amounts because the government absorbs most of the default risk. The EFS covers working capital loans up to S$500,000, trade loans, and project loans. Apply through your bank (DBS, OCBC, UOB, and others are participating lenders). The application adds minimal paperwork and the rate reduction typically saves 1-2% per annum — on a S$200,000 5-year loan, that is S$10,000-S$20,000 in saved interest.
16 Frequently Asked Questions About Term Loans, Overdrafts and Bridging Loans in Singapore
What is the difference between a term loan and an overdraft?
A term loan is a fixed-amount, fixed-tenure facility with regular monthly repayments. An overdraft is a revolving facility linked to your bank account that lets you withdraw beyond your balance up to an approved limit. Term loans have predictable costs; overdrafts charge daily interest only on the amount and days used, offering more flexibility but potentially higher annualised costs.
What interest rates do SME term loans typically carry in Singapore?
Secured SME term loans typically range from 4% to 7% per annum, while unsecured term loans range from 6% to 12%. Rates depend on collateral, business revenue, credit history, loan amount, and tenure. Government-backed schemes like the Enterprise Financing Scheme can reduce rates by 1-2% through risk sharing.
How is overdraft interest calculated?
Overdraft interest is calculated daily on the outstanding overdrawn balance. The formula is: Daily Interest = Outstanding Balance times Annual Rate divided by 365. Interest accrues only on days when the account is overdrawn and only on the overdrawn amount. If you repay the overdraft, interest stops immediately on the repaid portion.
When should I use an overdraft instead of a term loan?
Use an overdraft for short-term, unpredictable cash flow gaps lasting less than 60-90 days. Use a term loan for planned expenses with a defined repayment period. The overdraft is more expensive per annum but cheaper in total for short borrowing periods because you pay interest only on the exact days and amounts used.
What is a bridging loan for property?
A bridging loan is short-term financing that covers the gap between purchasing a new property and receiving the sale proceeds from your existing property. It provides immediate funds for the new purchase, and is repaid once your old property sale completes. Typical tenures are 6 to 12 months.
What interest rate do bridging loans charge?
Bridging loans in Singapore typically charge 5% to 6.5% per annum, higher than standard mortgage rates because of the short-term nature and higher risk. Some banks offer promotional bridging rates for existing mortgage customers. The rate is usually fixed for the bridging period.
What is the difference between capitalising and servicing interest on a bridging loan?
Capitalising interest means you make no payments during the bridging period and all interest accumulates, being repaid with the principal at maturity. Servicing interest means you make monthly interest-only payments during the bridge period, with only the principal repaid at maturity. Both result in similar total costs for short periods, but capitalising preserves cash flow.
Can I extend a bridging loan if my property sale is delayed?
Most banks allow bridging loan extensions, but terms vary. Some maintain the same interest rate for extensions; others increase the rate after the initial period. There may also be an extension fee. Always clarify extension terms before signing the bridging loan agreement and budget for a 2-month buffer beyond your expected sale timeline.
What is the Enterprise Financing Scheme?
The Enterprise Financing Scheme (EFS) is a government-backed programme by Enterprise Singapore that shares credit risk with banks on qualifying SME loans. The government absorbs up to 70% of the default risk, enabling banks to offer lower interest rates and higher loan amounts. EFS covers working capital loans up to S$500,000, trade loans, and project financing.
Do I need collateral for a business term loan?
Not necessarily. Unsecured term loans are available for SMEs with strong revenue and credit history, but they carry higher interest rates of 6-12%. Secured loans backed by property, equipment, or inventory offer lower rates of 4-7%. Government-backed schemes can partially substitute for collateral through risk sharing.
Can the bank cancel my overdraft facility?
Yes. Overdraft facilities are typically reviewed annually and are repayable on demand. Banks can reduce or cancel the facility with 30-60 days notice. This usually happens if the business financial health deteriorates, the account does not swing between overdrawn and credit positions, or the facility remains permanently maxed out.
What is the maximum term loan amount for an SME?
There is no fixed maximum for commercial term loans; amounts depend on the business financial profile and collateral. However, under the Enterprise Financing Scheme, the government risk-share covers working capital loans up to S$500,000. Larger loans are available through standard commercial lending but without government support.
How do processing fees affect the effective cost of a term loan?
Processing fees of 1-3% increase the effective cost of borrowing. A S$200,000 loan with a 2% processing fee means you pay S$4,000 upfront but still owe interest on the full S$200,000. This effectively raises the EIR above the stated rate. Always factor the processing fee into your total cost calculation when comparing loan offers.
Can I use a bridging loan for HDB purchases?
Bridging loans are more commonly used when upgrading from HDB to private property. For HDB-to-HDB transactions, the timing is often managed through the Contra arrangement where proceeds from the sale are applied directly to the purchase through HDB. However, some banks offer bridging facilities for HDB purchases where timing gaps exist.
What happens if I default on a business overdraft?
Defaulting on an overdraft means exceeding your approved limit or failing to reduce the balance when demanded. The bank will charge penalty interest above the standard rate, may freeze the facility, and report the default to credit bureaus. Severe defaults can lead to the bank demanding immediate full repayment and potentially initiating legal action against the company and personal guarantors.
Should I take a bridging loan or sell first then buy?
Selling first eliminates bridging loan costs entirely but requires temporary housing between sale and purchase. In Singapore, this could mean 2-4 months of rental at S$3,000-S$8,000/month, plus two rounds of moving costs. Compare the total rental and moving costs against bridging loan interest. For most families, the convenience and certainty of a bridging loan outweighs the saving from selling first, unless the bridging period is expected to exceed 6 months.
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Legal Disclaimer and Editorial Transparency
Enterprise Financing Scheme details per Enterprise Singapore published guidelines. SME term loan rates are estimates based on published bank rates from DBS, OCBC, UOB, and other major lenders as of 2026 and may vary by institution, collateral, credit profile, and business revenue. Overdraft interest calculation follows Singapore banking convention of daily rest on a 365-day basis. Bridging loan rates and structures per standard offerings from major Singapore banks; actual terms depend on property valuation, loan-to-value ratio, and credit assessment. MAS lending regulations per the Monetary Authority of Singapore. This guide is for informational and educational purposes only. It does not constitute financial, lending, or business advice. Consult your bank, Enterprise Singapore, or a licensed financial advisor before taking any business or property loan. Published by MAFHH INTERNATIONAL LTD. Editorially independent. We do not collect any data you enter into our calculators.
