Establishing a commercial venture in Singapore requires a lot of hard work, patience, commitment and most importantly, funding. Only a handful of entrepreneurs have the capital to expand business operations which is why taking up a business loan has become quite popular. Whether it is buying new supplies, opening a new production plant or purchasing new machinery, credit is a major requirement for SMEs in Singapore. The good news is that banks and other financial institutions are always ready to help.
To avoid rejections for a business loan application, you should ensure that your business is at least 6 months old and you must have a good credit rating. This is because business loan Singapore lenders fund establishments that are less risky. Some of the aspects that will be assessed before a commercial loan is granted include stability of cash flow, company ownership and income generating capacity. To that effect, make sure to prepare documents such as latest profit/loss statements, recent balance sheets, company seal, income tax documents, lease agreement for business premises and proof of ownership of collateral assets prior to making your business loan request.
To obtain credit for your business, it is just a matter of knowing what options you have. Here are four simple ways to source for a business funding in Singapore.
Micro-finance loans
Small businesses in Singapore that have less than 10 employees and an annual turnover of below $100 million can qualify for micro-finance loans. The funding period can last up to five years at the very least or even more and it is subject to a fixed interest rate. However, businesses seeking these loans have to be legally registered and shareholders with the micro finance institution.
Local Enterprise Finance Programs
LEFPs are best suited for small and medium enterprises. Typically, commercial establishments with less than 200 workers, an annual turnover of less than $100 million and more than 25% local shareholding stand a chance for local enterprise finance loans. The minimum business loan tenure for this type of funding is four years and you can borrow up to $15 million to expand business operations.
Certified Money Lenders
Licensed money lenders are the best option for businesses that have difficulty in securing a loan. This is because independent lenders are less stringent compared to banks when it comes to approving a business loan. The downside to this option of funding is that interest rates can be rather high. Therefore, it is important to compare interest rates among several licensed money lenders in Singapore before signing up for a business loan.
Internationalization Finance Programs
Internationalization finance programs are aimed at supporting SMEs with high growth prospects that can significantly affect Singapore’s economy. Purchasing assets abroad, establishing new production sites or raising capital to deliver large consignments are just some examples of massive projects that are best suited for IF schemes. The annual turnover for these businesses ranges between $300 and $500 million. It is up to the lending institutions to set the business loan terms such as interest rates, borrowing period and loan amount for these kinds of loans.
Regardless of what option is most suited for securing a business loan for your commercial establishment, remember to shop for the lowers interest rates and flexible repayment periods. You can also hire a business loan specialist in order to select the best loan package suited for your business.
