It is quite possible that short term loans might work for small business but many of them will always be looking for long-term loans. It is up to their business strategies and requirements that will lead them to the search for long term loans in Singapore. However, these articles is a short guide to help you get through the issues you have been facing in business and looking for solid financial assistance. There are a variety of options of long-term financing that vary in attractiveness depending on a business’s preferences. So, now if you’re looking for short term loans, long term loans or any of the intermediate loan options. This guide can help you choose between them wisely.
Options Available For Long Term Loans
There are many different financing options available that you can approach for your small or large businesses.
Business Term Loans
In some cases, businesses are required to provide collateral; if not, directors are generally required to provide a personal guarantee of repayment. The benefit of business term loans is that they can be used for many purposes, like business expansion. Also, equity financing may offer greater financing amounts than most business loans. However, business loans allow SMEs to retain ownership of their business. Business term loans make sense for SMEs that need important funding over a longer period of time and do not want to dilute ownership.
Asset purchase financing varies in a period based on the rate of the asset. Interest rates, too vary dependent on the specific asset. For instance, a classy asset, such as a car or a shop may be paid off over a longer period at lower interest rates, while a cheaper asset may be refunded over a shorter time period with higher interest rates.
The advantages of equity financing are that it does not require regular interest payments and that it can provide the greatest financing amounts. A downside is that the ownership of the business becomes diluted. Businesses that succeed may end up giving more to investors through equity financing than they would have through interest payments of a business loan. However, businesses that fail do not owe equity investors anything.
Purpose of long term loans in Singapore
Businesses should generally follow the rule of securing the length of their financing to the life of the asset they are financing. So, if a business needs to make a major capital development, such as purchasing a piece of apparatus for their industrial process that will last 10 years, a long-term business loan would be the suitable financing.
However, the ease of completion of a long-term loan depends on many aspects including the bank you have chosen to do business with, and the strength of the business economy. During the Great Decline, credit has been very tight and loans have not been easy to come by. So, in the end, it is all about your own feasibility and the choice that you make. So, decide wisely.