Company loans help to boost businesses and startups. We hear a lot of stories about how entrepreneurs started their businesses, but the truth is they probably got some form of help in the beginning.
So, taking out a small business loan can help you start or grow your business, but it is important to know what you are getting into before you go ahead and borrow money. The following are guidelines on how to get a company loan here on SUCredit in Singapore.
1. Prepare For The Application Process.
So, first off, you are going to want to prepare yourself before you go and submit an application. First, decide how much you need plus be clear on what you need the loan for.
You may use a loan calculator to know the amount of loan that can cater to your needs. Many lenders including SUCredit will mostly ask you why you would like to borrow from them.
There is a range of company loans and all have qualifications. Sorting out what type of company loan you need is very important as it may ease up the array of questions.
2. Check The Repayment Plans
Consider your repayment plans. Be realistic about how much your business can afford in terms of repayments, and think about any external factors that could potentially put a wrench in your plans.
Moreover, you should also consider discussing your plans with a financial advisor, which will give you some more personalized recommendations and help you just learn more overall.
Also, try and evaluate whether the repayment plans favor you at all. Do you feel comfortable with the duration given? How well can you structure the repayments to ensure that each month there is money allocated for that specific intention?
3. Check Whether You Qualify
Determine if you qualify for a company loan. Before you meet the required qualifications and get approved, you must check your eligibility. We are stating details like company legitimacy, company debt repayment history, references, quality of service, proof of business viability, and demonstrations of stable cash flows among others.
A company is a separate legal entity and has legal rights and responsibilities and is treated as a separate entity from its owners or shareholders. Also, try and check your needs first before settling for a specific loan to prevent going back for different loans before you pay the first one.
4. Submit The Documents.
With the simplicity of the SU Credit online platform website, it is very simple to submit your details for a quote. Once you check-in and access it, you will click on the loan application and be directed to a page for the process initiation.
Step 1. A page will appear on your screen that will require you to fill in your details which include: Full name (as per NRIC), contact number, and email.
Step 2: Click on next and a loan details page will pop up and will require you to fill in your monthly income of the company. It will also require you to input the loan amount you want to borrow and the purpose of the loan, which in this case you will choose and click on the business loan.
Step 3: After moving forward and clicking on the next process, the form will inquire from you whether you would want to write an additional message, for example, your preferred appointment date and time, or rather any formal suggestion.
Signs That Will Indicate That It Is Time For A Company Loan
1. Cash Flow
Not having enough cash flow could be a sign that you are ready for a loan. So for example, let’s say you are in a position where you’re constantly having to pay for new inventory upfront, but maybe your wholesale partners only pay you out at the end of every month.
There could be a chunk of time when you don’t have enough money available to pay for the things you need to have to run your business, like inventory. This is a legitimate example of when you might start looking for a loan.
You might need to invest in some equipment and a loan might make sense if you need equipment that is either going to start, maintain growth, or grow your operations.
However, the key here is that this investment should be showing a return in the long run. That will validate your need for a loan.
One of your biggest costs as an e-commerce business is hands down going to be advertising. So, whether that means that you are shelling out money on online ads, or maybe you have hired an agency to manage the ads for you.
A company loan can help you spend that money to be able to make that money back. Moreover, when you know how you will do it, then a loan will come in handy.
We cannot foresee the future, so sometimes even our savings may not cover our mishaps. Let’s say your equipment fails, a loan can help you get out of a sticky situation. Getting a loan would make sense in this type of scenario so that you can continue operating as usual.
Only take up a company loan when you have some needs. Otherwise, you may take up a loan and be unable to pay it on time. Also, consider checking the loan’s interest rate before agreeing to take it up. Do you think your company’s profit will be able to pay up the loan? Also, remember that there are other operational costs that you will need to cater to.
The current pandemic has caused a huge impact on businesses. Nearly 6 out of 10 Singaporean businesses will need at least 2 years to recover from the damage even if they speed up digitization, seek new revenue sources, or innovate in products and services. Having said that, small businesses or startups may have to suffer from the financial crisis owing to uncertain economic and political conditions.
In this case, a company loan in Singapore can provide some relief to small businesses or startups that are confronting cash flow issues. With some financing aid, businesses can establish themselves in the challenging market and sustain in the post-pandemic.
Let’s see what type of company loans you can think of in Singapore
What are the Types of Company Loan Singapore?
Usually, the loan structures available for businesses are of two types viz. The term loan and line of credit. Here, a term loan refers to a loan that disburses a lump sum of funds to a company with a fixed replacement schedule for a certain period. On the other hand, as the name suggests, a line of credit is similar to a pool of funds that a company can draw with interest charged only on the amount of money utilized.
Now that you know the basic structure of the loan. Let’s see what types of loans you can avail of.
Invoice financing refers to the borrowing of money again at the amounts due from customers. In this way, it helps businesses to turn their invoices into cash rather than waiting for customers to pay. This type of loan is specifically important for those who face issues with customers who take a long time to pay. A lot of funding societies provide invoice financing credit lines for businesses to maintain their cash flow.
These are the traditional loans that are provided by banks. A business term loan is generally a lump sum capital that borrowers have to pay in a pre-specified repayment period. It also has a fixed or adjustable principal and interest rate.
- Unsecured Business Term Loan
An unsecured business term loan is the one that is issued and supported by the creditworthiness as well as the business ability of the borrower to repay the loan. However, creditworthiness alone is not considered for sanctioning the loan. The repayment ability along with past business history also plays a huge influence on the loan amount. This loan can be disbursed without any use of property or any other asset as collateral. Also, the loan terms are generally dependent on the credit score of the borrower.
As the name gives you an idea, a merchant cash advance is a loan that is received by merchants or companies from banks or alternative lenders. The alternative lenders conduct a survey and analyse the creditworthiness of a company by looking at the business credit score, multiple data points including the money received by merchants through online transactions to accurately assess the business capability to make repayments. Usually, businesses with lower credit scores tend to use cash advances for financing activities.
In a merchant cash advance, the lender grants an advance capital and in turn buys a section of the daily credit of a firm and debit card sales. The company has to pay back the advance along with a percent of daily card sales. So, when you have a slow business, you pay back less and vice versa.
A venture debt financing or private equity is a type of financial aid provided to small businesses or startups that hold potential for long-term growth. It is usually received from investors with a high net worth or investment banks. However, it is important to note here that the funds granted may not be only in the form of money. These can also be a provision to other resources including managerial expertise and so forth.
A business line of credit is a loan that gives businesses access to a certain amount of money that can be drawn at any time based on requirements. In this, you get two types of line of credit as fixed and revolving credit. The fixed type provides you a stipulated amount of money while the money in the revolving type can be reset after the business pays the full balance amount. This is similar to credit cards.
What are the Types of Lenders?
The traditional banks as we all know are commercial or corporate banks that provide day-to-day banking services to businesses including services like credit services, cash management, commercial real estate services, and so forth.
Private equity is a type of investment class that is composed of capital by investors that directly invest in private companies or engage in buyouts of public companies. Such retail or institutional investors offer capital for private equity which can further be used to fund activities that improve new technology or working capital and so forth.
Peer-to-peer lending provides funds to businesses from individual investors instead of financial institutions or any middleman. These include certain funding societies that offer financial aid with or without collateral through a simple application process and fast approval.
Angel investor is also known as seed investor or private investor. These investors are generally high-net-worth individuals that are capable of providing financial backup to startups and businesses in exchange for ownership equity in the firm. These investors can provide a lump sum investment amount to get the business started or an injection of funds to keep the company going depending on your financial needs.
Looking at the economic decline from COVID-19, the Singapore Government has set up credit support for businesses.
Owing to the financial crisis post-COVID-19, a lot of businesses are struggling to keep up with the ever-changing economic situation. In this scenario, a company loan Singapore can help companies set up their business as well as keep them running smoothly.
So, if you are thinking of starting your business or revamp your existing one, our team at SUCredit can help you in availing of personal loans. We offer top-grade service and hassle-free loans to our clients. Our packages are tailored for our clients to ensure that their needs are met. Contact us at +65 6636 5644 or reach us here.