small business loan

If you are thinking of starting a new business, then it is easy to get confused with all the loan options available in Singapore, you want to set your business up in the right direction, but there are so many questions you don’t have the answers to. Don’t worry; this article will clarify your thoughts regarding what kind of small business loan is best for your situation.  

Fortunately, there are many small business loan options available in Singapore. You are bound to be eligible for some if not all of them. Many banks and private money lenders tend to give out small business loans in Singapore; however, deciding which one is best for you might be a little tricky.  

In this article, we will discuss which bank/lender you should opt for, the eligibility criteria for the loan, how you can apply, and typical interest rates that come along with them. You should not be so concerned because getting a loan now is far easier than it was ten years ago, especially in Singapore.   

How to choose your lender?  

Before we jump into the main part, it is better to cover up the basics. Getting a loan is comparatively easier than choosing a lender since there are a variety of options available both through banks and private money lenders. Keeping in mind your business capital and your list of inventories, ask yourself the following questions:  

  • Which bank/lender is inexpensive for your specific need?  
  • Which bank/lender has the most efficient response rate?  
  • Which bank/lender offer the maximum lending limit?  
  • Which bank/lender has the simplest process?  

Make these question the basis on which you will decide your lender. Making these questions the main factor in your decision will help you decide which lender best is best suited for your situation.   

A short guide to get a small business loan:  

Entrepreneurship can take up all the space in your head, and you might feel confused about which path to take concerning your loan option. Worry not! This article will help you make the right choice for your situation.   

Use of Small business loans:  

Small business loans are like personnel loans. They are designed to accommodate business needs from startups to expansions. Small business loans are very useful for people thinking of starting a new business. It provides them with the financial capital to make their business dreams a reality. Another use of a small business loan is expansion. You can easily apply for a loan to expand your pre-existing business.   

Eligibility criteria for the loan:  

This is probably the first question that comes up in your mind. Are you eligible? Well, to be short, you should have a good credit score to be eligible for the small business loans in Singapore.   

Fortunately, there are many credit schemes in Singapore, such as SME microloan schemes that can help you in this regard. Basically, what this means is that it is very easy to be eligible for a small business loan; however, the interest rates vary.   

What do you need to apply for the loan?  

Since money lenders/banks have a thorough process of checking before they release the funds, it is always better to be prepared. Make sure you have all your company documentation at hand when you apply for the loan. Your business plan, personnel finance statement, documents for the assets which you intend to put as collateral are some of the basic requirements of the lender/banks in Singapore. These documents will help your lender in identifying your capability of repayment.   

If you are looking for a non-collateral loan, then you will need a personal guarantee as an alternative, only then can you qualify for the small business loan.  

Typical Interest Rate:   

Interest rates are different for each bank/lender, so there is no way to determine a typical interest rate. You have to communicate your lender directly and discuss what interest rate they are offering. One thing that you should be aware of before you have this talk with your lender is that there are two types of interest rates; fixed and variable.   

While the variable interest rate might seem little in the beginning, but they are bound to get double or triple overtime. The fixed interest rate remains the exact same throughout the repayment period. You are better off with a fixed interest rate than you are with a variable one.   

All things aside make sure to have a detailed talk with your lender/ bank before you apply for the loan. Ask about all the miscellaneous charges and then decide which is best for you.  

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