With fixed interest rates and a monthly reducing balance, Local Enterprise Finance Scheme (LEFS) helps Eveready to upgrade their equipment while managing cash flow.
In 2004, Eveready Manufacturing Pte Ltd, Singapore’s largest plastic-recycling company, obtained a licence to operate out of Sarimbun Recycling Park. The company needed to upgrade their equipment to maximize the 15,235m2 business opportunity.
Fine-Tuned Application Process
To finance the equipment purchase, Eveready turned to the Local Enterprise Finance Scheme (LEFS) – a fixed interest rate Government loan – and was pleasantly surprised by how smooth the application process turned out.
What a difference a decade makes.
Explains Mr Mah Pow Tan, Financial Controller and co-founder: “We applied for LEFS 10 years ago. I was under the impression, from past experience, that getting approval would be cumbersome.”
The company relies on a full spectrum of machines to recycle plastics back into raw materials to create household, commercial, industrial and engineering items. Shopping bags, toys, plastic ware, parts for communications equipment and automobiles are just some of the products Eveready manufactures.
Its competitive edge is being able to handle the widest range of thermoplastics. Being ready to seize opportunities and having the funds to upgrade machinery is the key to success.
Choosing A Loan
“We actually wanted to go for a hire purchase loan to finance the new equipment,” he shared. “While we were considering our loan options, a few banks called and explained the benefits of the LEFS loan.” He was impressed by their pro-active approach and decided to give LEFS another shot.
After a 3-hour discussion with his company’s bank, DBS, Mr Mah had a firm grasp on LEFS. The company and the equipment purchase qualified for the loan.
“At that time global interest rates were rising,” said Mr Mah. “The fixed interest rates LEFS offered were very attractive. Moreover, the interest was payable on a monthly reducing balance – we pay less interest every time we pay back part of the loan amount.”
LEFS would help Eveready better manage their cash flow.
Taking Care Of Paperwork
Using the company’s regular banker helped greatly in cutting down the time and paperwork needed. It took just a week to prepare the company’s financials, details on the purchase and other documents required by the bank. To secure the loan, Mr Mah put up his personal property as security.
Once all the paperwork was ready, DBS carried out due diligence – checking on the declared purchase price and inspecting the machinery. Within two weeks, Eveready received the loan.
“The environment now is much more pro-business. The process is more open and there seems to be more room for negotiation,” Mr Mah says. “After having gone through so many loans from different banks, LEFS is now my choice. I would advise other companies in similar situations to seriously consider LEFS.”
How Eveready Secured LEFS
- Used the company’s regular banker to apply for LEFS which helped to cut down paperwork and processing time.
- Prepared all the documents the bank needed quickly.
- Co-founder was willing to put up perso
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