Business Loans

Business Loan Series Chapter 5: The Business Card

Benjamin Lam
June 16, 2022

Many people generally associate loans with cold hard cash placed in your hands or in your bank account, but amazingly owning a credit card can deliver the same result with better economics (less the psychological thrill of holding physical cash). This applies similarly to our topic of today: the business credit card. Here we are going to tell you that you can get an interest free working capital loan for your business that is revolving perpetually and why this is something you should always have alongside your SME loan.

Here’s a quick summary:

  • Pre-approved amount of up to 3x monthly cashflow, up to a limit of $500k
  • Pay non-card expenses as low as 1.3% monthly in processing fee per transaction
  • Get interest free credit for 20-55 days depending on your statement date and spend date.

How it works

If you are a user of a personal credit card, you will find the concepts of a business card relatively easy as its functionalities are the same. Here’s a quick breakdown on how you can use a business credit card to get interest free working capital:

Credit Limit Determination

The first step to your business card is credit limit determination. This works the same as your personal credit assessment only that it has a little more business data. A typical assessment will require your financial statements, bank statements, credit bureau report of your directors and shareholders and their notice of assessments. Credit limits are typically 3x of your monthly cashflow and can go up to S$500,000.

Focus on Cardable Spend

Once you got your credit limit determined, you are now able spend off the credit of the card issuer. However, it is to note that this only applies to “cardable” expenses. These are usually for online spends such as digital marketing, travel bookings, transportation and even some phone and utility payments. Monthly expenses as such can sometimes reach up to $100,000 for some businesses.

Leverage on Interest-Free working capital

Here’s the most important part. Understanding your statement and due dates is key to help you time your expenses and leverage on interest-free working capital for your businesses. See below diagram for better illustration.

  1. With a $100,000 credit limit, an SME spends $45,000 on the 14 Mar 22, which is one day after the statement date. This is the best scenario where it is the furthest from the statement date. Therefore, it is most optimal for businesses to spend as earlier on as possible to leverage on a longer interest-free credit period  (up to 30 days)
  2. On the 13 Apr 22, the statement will be billed for transactions made from 14 Mar 22 to 13 Apr 22. Any transaction made after the statement date will be billed only in the next statement 13 May 22. Thus, the SME can still make another $45,000 transaction on the 14 Apr 22 with the raining credit limit.
  3. With the due date on the 7 Apr 22, it gives the SME an additional 24-25 days of interest-free credit from the statement date.
  4. Based on the above, this means that not only will the SME get a total of 54 days of interest-free credit, but if he only uses half of his credit limit each time, he is able to achieve what many call permanent working capital (in this case S$45,000). See table below.

From the table you can see that there will always be at least S$45,000 of outstanding balance with almost 20 days of S$90,000 balances. This is entirely interest free and can be revolved every month. Essentially you just obtained at least S$45,000 of free operational cash flow.

Now you must be wondering, someone must be paying for this if not me. And that is a fair question to be asking. The real answer is that the merchant that you are using the card on via the card is paying for it through the merchant discount rate (MDR). This means that the card issuer collects a fee of about 2% from the merchant for facilitating the transaction. And that is what pays for your cost-free working capital.

What about non-cardable expenses?

One way to manage non-cardable expenses is to look at service providers that can help convert a card spend to a non-card one (i.e. a wire transfer). This typically comes with a processing fee of as low as 1.3%. This means that you can use your credit limit obtained from your card for anything (even when they are not cardable). This includes paying for your supplies which you originally pay via wire transfer. The processing fee that you pay is therefore interest cost for a 55 days credit. This average to about 8.6% p.a

The two biggest players in this space are Cardup and iPayMy. Below are the pricing:

Get so much more on cards

Cards are a must get for all businesses simply because, even if you don’t bother about the credit, you get rewards. Most cards offer you rewards on your spends, remember they earn about 2% in MDR from the merchant and will be more than happy to give rebates to you. In fact if you are simply paying for something that is “cardable” by cash, you are leaving money on the table.

If this is your first time applying or considering, try a credit with some of our Lendingpot partners, Youbiz, Volopay or Aspire for exclusive perks.

Apply here:

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If you want to find out more to the secrets of cards, do feel free to book an appointment with us and we will be more than happy to share our thoughts with you.

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Leading digital loan marketplace Lendingpot connects SMEs to its network of 45 lenders comprising relationship managers from banks, financial institutions, and private and peer-to-peer lenders in Singapore for free. It aims to help SMEs overcome the information asymmetry problem and lack of transparency prevalent in the SME financing sector by offering SMEs financing options such as business term loans, property loans, revenue-based financing, credit lines, working capital loans, bridging loans, invoice financing, and more.


Leading digital loan marketplace Lendingpot connects SMEs to its network of 45 lenders comprising relationship managers from banks, financial institutions, and private and peer-to-peer lenders in Singapore. It aims to help SMEs overcome the information asymmetry problem and lack of transparency prevalent in the SME financing sector by offering SMEs financing options such as business term loans, property loans, revenue-based financing, credit lines, working capital loans, bridging loans, invoice financing, and more.

About the author

Benjamin heads up Lendingpot with a background in all things SME. He was previously a commercial banker at Citi with experience in Relationship management, Credit Risk, Trade Operations and Corporate FX sales; and understands the difficulties SMEs face in this opaque world of SME financing.

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