Singapore firms turn to short-term financing as tariffs squeeze cash flow

Exporters brace for higher warehousing charges, paperwork, and fixed costs.

Trade policy shifts, including new US tariffs, are reshaping borrowing behavior across Singapore’s most exposed industries and raising global trade costs.

Bryan Tay, Country Manager for Singapore at Lendela, said the squeeze is already visible at the firm level. “Trade fiction is changing how Singapore firms borrow. But not all sectors are reacting the same way,” he said. “The most trade exposed parts of the economy, like manufacturing, wholesale, wholesale trade, transport, logistics, construction and even retail and FMB, are behaving more defensively.”

Tay added that data from Lendela reflects this shift. “We’re seeing more demand for smaller loans and fewer for big ones. So what this means for business owners is that they’re thinking about survival, flexibility, optionality, and focusing on keeping the leverage light until trade conditions become clearer.”

The pressure is especially acute for small businesses. “For an SME, such tariffs means paying more upfront while waiting longer to get paid, and this causes a painful squeeze on cash flow,” Tay said. He pointed to an SPF poll in April showing over 80% of firms expect tariffs to hurt them, with nearly 60% anticipating higher working capital needs. According to him, “63% of applications are working capital loans, 33% trade loans, and just 17% project loans.”

Customs delays have deepened the strain. “When shipments are delayed by a month, incoming payments are also delayed a month. But paying for salaries, paying for rent, these things can’t wait,” Tay said, noting SMEs are becoming more disciplined by turning to structured products like working capital, trade financing, and bridging loans rather than personal borrowing.

Dr Amitendu Palit, Senior Research Fellow and Lead (Trade and Economics) at NUS–ISAS, said the broader picture is one of rising costs. “They need to hold on to their products, to their warehouses for a somewhat longer period of time, because they are not totally sure about how much time the customs delays and inspections are going to produce,” he said. 

Beyond warehousing, exporters face heavier invoicing requirements and the need to hire customs and logistics experts. “All in all, the bottom line of all this is that the cost of trade between various countries and the United States is going to go up significantly,” Palit said.

With the US accounting for 12% of global trade, he warned these additional costs will add a lasting burden to exporters worldwide.