The economy of Singapore is known to be a tough one especially for the small and medium sized enterprises. There are a large number of SME’s that operate in Singapore’s and financing them alone is something that is not possible for the government. The economy is also known for favouring the large businesses over the sme’s which is also one the reasons that makes funding impossible. Singaporean economy is known to be a gloomy one for these SME’S, as there is a decline in their growth in the last couple of years.
In a situation like this taking a loan from the financial institutions is what the SME’S can do, as there are a lot of financing institutions that work for making the dream of small and medium enterprise owners come true. So starting and growing a business involves a lot of hard work at each step and it also requires proper financing.
Take the right decision
Before you apply SME business loans in Singapore, it is important to look into a few things and answer a few questions which will help in taking the right decision.
- The purpose for taking a business loan- Loan is usually taken to solve the problem of day to day cashflow for running a business but loans are not free of cost. In case the management of the loan if not done properly then it can have a serious impact on the business and its finances. Therefore, one should be clear about their purpose for taking a loan, so that you can manage your funds accordingly. It is essential to have a clear idea about a loan before taking it.
- Financing options- The SME’s in Singapore have a number of financial options available, most of them are not from banks like:
- The business term loan- There are business loans that can be taken up from bank, but the only problem with these business term loans is that a company has to be operative for 2years and there are a lot of penalties for pre-payment.
- Alternative finance- The alternative financing is done by alternative financers that help in giving loan to businesses when they do not qualify for loans by banks. These depend on one’s credit rating but with an option like this there are some hidden fees.
- Loan needed- The purpose of taking the loan decided the amount of loan to be taken. One should try and not borrow more than the amount needed because paying it back is a task.
- Would you be able to afford the loan? Not being able to repay the loan is something that can cause a lot of trouble; so while taking a loan one might need a guarantor, one can also give a personal guarantee in form of property or inventory. Having a written agreement with all the terms and conditions mentioned is necessary and should be there. Find out about the problems that you might have to face if unable to pay the loan, know about the grace period and then take a loan accordingly.
- Cost- The fee for every loan is different, so make sure that you find out about the maintenance fee, the interest rate structure and the penalty before taking a loan.
- Have all the documents- In order to get a loan make sure you have all the necessary documentation, with all the documents in place one might can get a loan in a short span of time.
In order to get a financial loan it is important study the above questions and then decide carefully about the right loan to take.
Apply SME business loans in Singapore is the only options SME’s have as getting financial assistance from the Singapore government is tough; there are quite a number of pros and cons of taking a small business loan that every SME owner should be aware of.
Advantages of SME loans
- The biggest advantage of taking a SME loan is that an SME business owner still has the control over his organisation. The reason for this is that the banks or the loan companies that give SME loans are not interested in your business but in how will the loan be repaid with interest.
- There are different types of business loans available these days, which are designed only for the small business owners. So one can choose any one of the loans according their preference.
- Getting approved for a SME loan is a tough task, there is a lot of paperwork, documentation and amendments that need to be done in order to get approved for a loan. Usually it takes 3 weeks to get approved for a loan and loan is given only of an institution feels that the business is going to be profitable in the long run.
- The period of repaying an SME loan is quite short as compared to the secured loans. The rate of interest is also quite high as compared to the secured loans.
One should consider the advantages and disadvantages of taking an SME loan than making a mistake that can cause a lot of damage.
Taking a SME loan in Singapore is considered a preferable option in the following situations;
- When one is planning to expand his business, funding can help in the expansion plans.
- Taking SME loan is considered to be a good option for marketing purposes, a SME loan can help a business owner in boosting its business with good marketing strategies.
- For good business one needs good equipment and an SME loan can be taken in order to purchase that equipment to improve the service and the help the business flourish.
So in order to take an SME loan it is important to study the options well. For which it is important to stay updated with all the latest information related to the SME loans and the SME growth in the Singapore.