Do you know what are your business loan options?

Cashflow is the lifeline of any kind of business.

Seasoned entrepreneurs are aware that while turnover as well as earnings matter a lot over time, it is cashflow that will rapidly make or break the business.

That is why small and medium-sized (SME) venture funding is an evergreen worry for all small companies.

Business owner signing a business loan form
Time is of essence. A good SME loan offer can help a company funds & expands its business growth.

With much less negotiating power because of their smaller sized dimension, SME proprietors commonly need to pay first for service or products from providers, and also are typically the last when it comes to settlements by consumers.

This gap in settlements in specific markets can be as long as a number of months, such as in the building and construction field.

When unforeseen crises struck, such as late settlements by clients or budget plan overruns, companies without appropriate funding can be left completely dry as well as high.

With a lot at risk, SMEs have to ask themselves “Are my existing funding sources ample for my business requirements and also future growth?

Getting a business loan isn’t always a bed of roses

Still, start-ups that are less than 3 years in operations usually do not meet the meet the banks’ stringent lending criteria. These younger enterprises will certainly have to go to higher-risk non-bank monetary establishments where they will have to pay a high interest rate that can further eats into their cashflow.

Where else can SMEs turn to for alternative financing options?

Having said so, it doesn’t meant that it will be easy for companies which more than 3 years in operation to get a loan from the banks. These more mature ventures will still need to be on their toes to maintain an excellent credit score. Otherwise, it is very unlikely that financial institutions are willing to offer an attractive loan rates.

With a variety of government-assisted funding systems in Singapore, they offer to ease some funding troubles for SMEs.

Some instances of Local Enterprise Finance Scheme (LEFS) are:

SME Equipment & Machinery Loan –  Great for businesses that are seeking extra funding for the purchase of new equipment or financing of existing equipment. The financing can go up to 90% of the market valuation or purchase price of the newly purchased equipment. As it is most likely a collateral loan, interest rates can be competitive, ranging from 4% – 6%.

SME micro loan – In collaboration with Enterprise Singapore, companies less than 3 years in business are able to get a funding of up to S$100,000 with a repayment of up to 3 years.

SME Working Capital Loan – Want to gain access to a higher loan quantum of up to S$300,000 with a slightly longer repayment period – up to 5 years? Well, you can consider the SME working capital loan. However, as the loan offer is more attractive, this loan is usually only offer to small businesses which are longer in business with proven track record.

Financial Institutions can be your next best bet when it comes to getting a business loan approved.

Besides banks, financial institutions are the next financing alternative you can consider when looking for a loan for your business.

SME owners now are able to approach licensed finance firms for
uncollateralised loans:

  • Ethoz Capital,
  • IFS Capital,
  • ORIX Leasing Singapore,
  • Hong Leong Finance and
  • Sing Investments & Finance

Keen to explore peer-to-peer (P2P) lending?

Year over year growth, peer-to-peer, or P2P, lending is one of the fastest growing investments. Otherwise known as marketplace lending, P2P lending is a growing alternative to traditional lending.

 

Though still in its inceptive phase, peer-to-peer lending is definitely gaining spotlight in the fintecth space.

As the name recommends, P2P lending swimming pools together funds from individuals which are in turn lend to individuals or SMEs at a much higher interest rates than the banks or other financial institutions.

Crowdfunding platforms directly connect lenders to borrowers, disrupting the banks’ traditional dominance in the SME financing scene.

While the P2P lending options are dazzling, crowdfunding platforms tend to have higher interest rate loans.

As such, unless you need the funds quickly without the hassle and tedious paperwork, then P2P can be a great alternative although it shouldn’t be a long-term and sustainable financing option.

No matter the finance choice you select, using up a car loan for your company is not a choice to be ignored. Constantly do your study & choose very carefully if occupying a service financing is truly required and also if it will certainly place any type of needlessly stress on your company financials.

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