In this portion, we will address what is a business loan and tips to improve your chances of getting them. Also, we will enumerate the reasons why an SME takes a business loan in Singapore.
What is a business loan?
A business loan is the kind of loan that is popularly taken by either small or medium businesses. The main reason being, they need money so that they can buy things that can help them grow in the market. If they grow in the market with the help of the loan, then it is a good thing as the loan was very helpful. If this happens, then the company will have a good time repaying the loan amount in EMI. Just like business financing, you can also get a car financing Singapore which is easy to get. The only thing is that the car will be in the name of the lending company till the EMI is paid. If the borrower fails to pay the EMI, then the lending company can take away the car because it is theirs. This is a bad thing to happen because it will show a negative marking on your credit rating report. It is very easy to get any kind of loan, but you need to have money to repay it on time. In Singapore, there is around 65% of the economy made up of SMEs. This means that there are mostly a lot of startups in Singapore, and they need money to survive. Most of the companies in Singapore are big corporations as it is the world business capital. A lot of big businesses work and operate in the country. There are a lot of businesses that you can find here, and it is challenging to survive here. They have to face tough competition in everything that is business and other things.
What are the tips to improve your chances of getting a business loan?
Given below is the list of tips that you can use to increase your chances of getting a business loan Singapore.
- Build a good credit record
A credit record means a good credit rating of the business in the market. This will improve your chances and also get your loans faster and with less interest rate in the market.
- Provide a clear and good business plan
If you have a clear business plan, then you can also decide if you can pay the EMI or not. This will help you to decide whether to take the loan or not take the loan.
- Have a well-maintained bank balance
If you have a good bank balance for your business account, then you can take a loan very easily. This is because it will show a good report to the bank or institution and will give you a loan quickly and with less interest.
- Have existing and upcoming projects in mind
When deciding the amount of loan that you want to take, you should check the existing and upcoming projects. Moreover, it will help you to finalize an amount that you want to take for the projects as well.
- Apply at the right time
The right time to apply for a business loan is when your business is selling things in the market. If you have an unstable business or it is going in loss, then it is good that you don’t take a loan.
- Provide the required documents
When you are applying for a loan, you must have all the documents ready, which means on the go. You can just research and then go to the moneylender, submit the documents and just wait. You will then either get an approval letter or a rejection letter back from them.
What are the reasons why SMEs take a business loan in Singapore?
Given below is the list of reasons as to why the SME takes business loans.
- Accelerate growth and expansion
If a company wants to grow in the market, you will need money to do so, and you can take a loan. Or else if you are thinking of shifting or making the current place big, you also need money.
- To take advantage of opportunities
A business opportunity is a good thing for any business. If a business can identify an opportunity, then it will need money to pursue it. This is why you need to take the business loan, and then you can fulfill or grab the opportunity.
- Inventory and equipment
Suppose you want to increase your inventory or buy new equipment. Then you need to take a business loan as these things are very expensive.
- To grow creditworthiness.
If you take a business loan and repay it, then it will increase your company’s credit rating a lot and help them grow.