Generally, most business owner (s) has to survive a period of 3 years in operation before bank and financial institutions are willing to consider granted some form of working capital loans and unsecured facility to their companies.
During these 3 years of establishing their business, owners must remember to maintain the good credit repayment record as well as minimise their personal unsecured loan exposure, for example, credit card balance transfer or personal loans.
Business owner must realize and clearly understand their own requirement before applying for the loans and facility. The following are some of the question to ask yourselves.
- What is the purpose for this additional money?
- How much money do you need?
- When and how fast do you actually need to use the money?
- How long do you need it?
- Are you able to pay the monthly instalment?
After understanding the above questions, so what kind of loans can meet their requirement, what loans requires least collateral or no collateral and fastest to receive the funds into the bank account.
Typically there are two types of Business loans
- SME Working Capital Loans (WCL) – 50% Risk sharing with Enterprise Singapore or SPRING Singapore. No collateral required. Only personal guarantee. No early redemption penalty. Loan can be up to SGD 300,000 and maximum loan tenure is 5 years, attractive interest rate
- Bank’s in-house business loan – Subject to individual bank risk appetite. No collateral required. Only personal guarantee. Early redemption includes early redemption penalty or fee. Loan can be up to SGD500,000 and maximum loan tenure is 5 years.
Basic criteria for the loan:
- Minimum 30% Singaporean shareholding in the company
- Must be in operation for 3 years
- Business turnover shall not exceed 100 million and employ less than 200 staff.
- Business must be legitimate and evidence of actual transaction readily available.
Since the government assistance scheme are offered to all the banks in Singapore therefore different banks have different interest rate and subject to each individual bank’s credit approver.
Imagine each bank has its own offered interest rate and credit approval habits, therefore it is relatively tough for business owner to apply for the loans on their own and they may not have the luxury of time to go through the process of each single banks.
SME Working Capital loans typically falls within 7% per annum to 8.5% per annum.
Individual Bank Unsecured Business Loan falls within 9.99% to 12.99% per annum.
The fundamental requirement is simple. I have a new deal or additional quantity, how much money do I need the money and when do I need it.
Most of the business owners chose business loans are mainly due to the least requirement for the loan and it is the fastest to disburse.
But Business owners may not be familiar with their bank’s credit criteria, therefore an experience loan consultant is able to increase the approval process and negotiate for a better interest rate for your loan.
Business owners can look at it as their client employed their expertise to help them deliver the service or manufacture the products that requires.
This is a cynical life cycle.
Business owner should consider engaging loan consultant’s services to get the best packages in town. Loan consultant will not receive any payment of their service fee from you if they had not bring the best deal to the table.
Business owners can effectively use this time to concentrate to look for more deals and grow the business.
