Category: business loan

As a business person, there are always ups and downs in your business activities. To be successful, you must take advantage of the market and get an upper hand. This may be in the form of purchasing more products at lower unit costs. However, at times, your cash flow may be limited and may lead to missing out on a business opportunity.  What can you do to ensure you make the best of business opportunities? Apply for a Business loan. In Singapore and all over the world, business loans are an essential stepping stone one can use to expand their business. Some of the most successful businesses in the world owe their growth to business loans they got at the right time of their business cycle. In this article, we are going to see how one can qualify and apply for a business loan in Singapore. What are Business Loans? A Business loan is a financial credit facility offered to a legally registered business that allows it to start, expand, or increase its current stock.  Business loans also come in handy if the business, which has been performing well, has a slight difference in its performance and may need help to pay its debtors and suppliers to ensure continuity of its operations. To cater to the various stages of the business, Financial institutions may have different categories depending on the stage of the Business. Some business loans are government-assisted financing schemes. There are startup business loans, which are tailor-made for businesses that are just starting up. We also have SME Working Capital Loans, which are available for already existing businesses. There are also Temporary Bridging loans, which assist Small and Medium Enterprises access financing where there are shortfalls in their cash flows. One can access business loans that have repayment periods of up to 5 years. What is needed to apply for a Business Loan in Singapore? As mentioned above, a Business Loan is a credit facility offered to a legally registered business entity. The loan is granted in the name of the business and not an individual’s name. Therefore, to qualify for a business loan, some key requirements one must prove are: The business is a legally registered entity under Singaporean Laws and provides proof of ownership. The owners are required to submit financial records of the business. A business plan is required especially for Startup Business Financing. Goods and services tax (GST) Records for the business. With all this in place, you can start shopping around for the best business loans that are suitable for your business need. Factors that may affect your qualification for Business Loans 1.     Business Track Record. For already existing businesses, the business financial statement is used to evaluate the business’s suitability for a business loan. The revenues and income statements assist to see how solid the business is and can be used to project cash flow. Therefore, ensuring that your business has sufficient cash flows, will be a plus while applying for a business loan. The cash flow will indicate the business’s ability to repay the loan granted. For startups, a well-defined business plan is crucial in the evaluation of the business opportunity to be financed and may affect the loan limits provided. Lenders will evaluate the feasibility of the business you are venturing into. 2.     Ownership of the Business. For government-assisted financing schemes, they require a minimum of at least 30% Singaporean Citizen Ownership. If your business does not meet the requirements for Government-Assisted Financing, do not worry as there are licensed moneylenders and financial institutions that have business loan packages suitable for you. 3.     Business Record Keeping Businesses are advised to ensure that they observe detailed record-keeping for their business activities. This means keeping documents such as bank statements and accounts in order, as well as the supplier and customer records. The more detailed and transparent the records of the business are, the easier it is for financial institutions and licensed moneylenders to evaluate the business’s suitability for a business loan. 4.     Business Credit Score. One of the go-to evaluation criteria used by lenders is to rely on credit scores. It is always a good business practice to ensure that you are always in good standing with the business creditors and lenders. Before applying for a business loan, ensure you pay all your bills in time and are paying already existing loans in a timely manner. A good business credit score goes a long way in ensuring a successful Business loan application 5.     Ensure all vital Application Documents are available. As mentioned, business loans are offered to legally register businesses, hence one has to ensure that all the vital documentation in regard to the business operations is available during the loan application. These documents are used to appraise the business for business loans. 6.     Apply for Loan Limits the Business is able to repay. To ensure you qualify easily for a business loan in Singapore, ensure that you do a proper assessment of the loan amount the business can comfortably repay. Before receiving the loan, it is advisable to design your budget to enable the planning of loan repayments and to evaluate how much loan capital you need. The uncertainties of business in the previous years have made business operations harder to predict. It is therefore prudent to ensure, when applying, apply for realistic loan limits. Remember, for successful future business loan applications to grow your business, you must maintain a good credit score through timely repayments of your loan obligations. 7.     Period of Operation of the Business. The time period of operation for a business before applying for a business loan is a factor to consider. Loan applications from businesses registered a day before the loan application may have a difficult time qualifying for a business loan. Apart from the above-mentioned criteria, each lender may have additional requirements, hence it is important to find out the specific requirements needed by the lender in advance. What next if you meet

If you are a small and medium-sized enterprise in (SME) owner in Singapore, you are likely to seek financial assistance at one point in time. Business loan sg can either be used for capital investment, to boost working capital, pay rent, or other purchases. This guide enlightens SMEs on the available options for boosting their businesses through business loans in Singapore. Types of Business Loan Available in Singapore Government Assisted Business Loan Scheme This is a working capital loan and temporary bridging loan program. This scheme was introduced in 2020 during the height of the COVID-19 pandemic as a way for the government to support enterprises in Singapore that were already feeling the hit of the pandemic. The loans are administered by Enterprise Singapore (ESG) and their participating financial institution (PFIs) They are very attractive to SMEs as they include a government risk share of up to 90%. They offer 3 loan facilities: SME working capital, trade loan, and a temporary bridging loan program.  Unsecured Business Term Loan Unsecured business term loans are not secured by physical collateral such as property or equipment, but by company directors’ personal guarantees These loans are very popular among SMEs due to their flexibility. They can be used to finance working capital for daily operations such as the purchase of inventory and payroll or to finance business expansion plans such as leasing a new retail outlet. Merchant Advance Merchant advance (MCA) is a financing product that is only available to retail or F&B businesses that use credit card terminals. Qualification criteria are based on 6 months of credit card transactions. If you request huge amounts, then you’ll be required to provide your financials and guarantors. Invoice Financing Invoice financing in Singapore refers to a credit facility that uses invoices as collateral. The amount to advance is based on the strength of the SMEs customers. Government or Multinational corporations (MNC) customers are usually the most preferred customers as their payments are always guaranteed. The SMEs receive business loan sg by providing the invoices that are awaiting payment. Then, the lending institutions will process the loan and use the invoice as collateral of which they’ll recover their money plus interest once the invoice amount is settled mostly in a month’s time. Business Overdraft An unsecured overdraft is viewed as an alternative to a business tern loan and is recommended for SMEs who require short-term financing for working capital. Unlike the term loan, Overdraft provides the SME with a line of credit instead of a lumpsum amount. Interest is only charged on the amount used. The overdraft facility allows the SME to have multiple withdrawals of any amount up to the credit limit. Business First Loan This is an unsecured business loan sg that caters to young start-up registered and has been operating in Singapore for 6 months to 2 years It is one of the few loans available in Singapore for business start-ups With the above information in mind, the next step is to look for a reputable lender and apply for a loan.