What is a company loan in Singapore?
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
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.
- Business Term Loan
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.
- Merchant Cash Advance
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.
- Venture Debt Financing
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.
- Business Line of Credit
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?
- Traditional Banks
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.
- Equity Financing Firms
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 Lenders
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 Investors
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.
- Government Support
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.
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