Business is going and growing fast, you can’t wait for revenues or profits to take the next step. Financing is an essential part and it is to be at the perfect time. There are many different types of loans available through banks in Singapore or private lenders. All you have to do is to choose the one that is suitable for the type and need of your business. The current situation of your venture matters a lot, so before plying for the loan, make sure you are fully aware of the inside situation. One of the types of loans is Working Capital Loans. Let’s see what it is and what are the different types of it that you can avail?
What is the working Capital Loan?
A working capital loan is a short-term business income source used to fulfill the financial needs of day-to-day operations, like buying inventory or covering payroll. There are simple criteria to know if it will work for your business or not. Evaluate the criteria by following some simple steps:
- Loan amount
- Interest rate and Costs
- Funding Speed
- Factors of Qualification
- Conditions for repayment
- Security for the Loan
- Guarantee Requirements
These are the main factors that should help you evaluate the criteria of applying for the loan. You can’t rely on the information or calculation done by the lender. You need to do your own computations and reach to the conclusion by keeping your feasibility as a priority.
Apart from the basic understanding and criteria calculations. You should also know about the different types of loans. Little research and know-how before any final decision are better than anything. You should always go prepared and opt for the maximum choices and select on the base of needs and demand of business.
Types of Working Capital Loan
Here are the most common types of working capital loans to avail in Singapore.
1. Accounts Receivable Loan
It is the type of loan taken out on the basis of its account receivables. It includes invoices or cash owned by the clients to the business.
2. Merchant Cash Advance Loan
It works by trading future assets for instant cash. When a business takes up this Working Capital Loan option, it obtains upfront working capital. The loan will then be paid off over the daily deduction of a certain proportion.
3. Trade Credit Loan
It allows a small business to suspend the payment for goods and services. In this case, the bank or lender pays the supplier upfront. While the bank takes the rights of ownership, it permits the corporate to take ownership of the stock for trading or sales purposes.
4. Line of Credit
It is the most flexible type of borrowing by the bank or lender. The benefit of this loan is flexibility in repayments without any penalty.
5. Business Term Loan
This loan type is repaid in a structured way. A proper time span is defined which can be from 1 to 5 years. The interest rate can vary or fix, depends upon the conditions of the lender or bank.
Now it is completely your choice to choose the best for your business and its growth.