Getting your business through the first few years can be pivotal and requires you to have working capital to cruise through without tragic hiccups. However, not always do we have enough money to keep those operations running smoothly, and you may need to get a loan from money lenders in Singapore for those dreams of more clients, business expansion, and better earnings to start taking shape. That said, getting a business loan is not something you just wake up to, you need a working plan, vision and most of all preparedness.
Below are ten things to consider when borrowing money from a money lender in Singapore.
1. What is your reason for the business loan?
Apparently, the first instinct that kicks in is that you want to maintain or grow your business into an authoritative enterprise. Well, as much as that is true, you need to dig a little bit deeper and be more specific with your objective.
Entrepreneurs borrow loans for all manner of reasons. For instance, one may want to increase the production of cupcakes especially on specific days when they experience a bump in demand like during valentines or Christmas Eve. To successfully satisfy the market without having to forgo the quality of your product, you will need to consolidate additional working capital, and that might mean hiring an extra pair of hands.
Reasons for getting a small business loan are endless and only vary from one person to another. Whether you intend on buying new equipment, settling existing debts, or renting a new place for expansion the rule of thumb is to identify it on your business plan as it will keep you focused. It might prove helpful to see your loan as an investment that will help your company flourish in the future.
2. Are you in a position to repay the loan?
Many times when getting a loan we focus so much on the interest rates and quickly forget about other fees that banks and financial institutions are capable of charging us. Conduct a financial analysis. Knowing whether you can repay the loan you are taking is just as important.
It is prudent that you compare loans and go even further to ask for quotes. Online lenders are ideal and desirable for business loans. The primary obstacle with banks is that their loan packages are fixed and lack the fluidity to cater for the unique needs of your business entirely.
3. How urgent is the loan?
Depending on how soon you may need the money, banks fail flat out when it comes to immediate loans. For instance, a business opportunity presents itself without as much as a warning as they often do and it requires quick reaction on your part. Like that equipment you have been tracking for a while now is suddenly up for sale but coincidentally you lack enough funds to purchase it. Waiting is no option either for buying it now will save you a lot more. You cannot rely on the bank loans as we all know how they can stretch for weeks to get processed and even then does not guarantee positive results.
Online business loans provided by licensed money lenders in Singapore boast of a shorter process that can take as little as less than 24 hours to get processed.
4. How much working capital do you need?
First, go to your accountant or bookkeeper for financial advice. Then make a realistic business plan that adequately addresses your needs without excluding anything vital. Rule of thumb, borrow only the amount you need. Acquiring a loan comes with a financial responsibility that you must meet to avoid severe penalties such as bad credit score.
Utilize loan calculators as they are essential in letting you on the know when it comes to the total amount you have to pay and all the repayments on your loan term option.
5. What type of lenders do you need?
There are various types of lenders out there and so are their loan products. The good news is that traditional banks no longer limit your options. Recall that banks offer rigid business loans that do not blend well with your business’s goals and have strict lists of eligibility.Registered money lenders provide by far the best loans suited for your small business.
6. Are you willing to share your story with your lender?
Moneylenders will want to get an idea of your business by asking about the nature of your business, earlier ventures, credit experiences and set goals. To gain trust and get on their good side you need to show them that your company is both lucrative and has a massive potential for so much more. This reassures the lenders that you are capable of repaying the loan, and therefore they are more willing to hand out the cash. To achieve such a milestone you need to reveal who are your clients, ways you manage your business, how you deal with your credits and the achievements you have made so far.
7. Are your documents prepared?
Money lenders are very wary of dishing out money to individuals who lack a solid financial background. They are very strict when it comes to qualification, and you need to show them documents that prove that your business is thriving and thus worthy of the loan. These could include bank account statements, Income Tax Notice of Assesment and other financial reports.
8. Is your credit score good enough?
Before applying for any loan, it’s critical that you get a copy of your credit score. Knowing your credit score sets you up nicely for the next move you need to make. Firstly, it cautions you on the type of lender that is best suited for your needs or whether you should wait a little bit longer to build your credit score before applying. Why?
In most cases, a borrower with a poor credit score is automatically rejected: wasted energy and time. Moreover, a loan application further dents your credit score because every loan application is taken into account.
9. Do you have other debts?
For those that have debts, you need to prove that you have sufficient cash inflow to contain additional financial responsibilities. It is always advisable not to hide any indebtedness from your lender because sooner or later it will show when they go through your credit report. For the sake of argument let’s assume that you manage to get away with it, the financial demands will certainly overwhelm you making repayment an even more daunting task
10. How has your relationship been with previous moneylenders?
I cannot emphasize enough how rewarding it is maintaining a positive relationship with your lenders. For one, you are quickly entered into the pre-approved list. Secondly, You are teaming up with an intimate financial partner that you can quickly turn to for another loan because of you long-standing and trustworthy relationship. Also, the loan approval will be quicker for you and perhaps with more substantial loan amounts.
We understand that applying for small business loans is frustrating but getting acquainted with the processes involved can shed off some weight making it more worthwhile. Plus at the end of it all, you will be more knowledgeable and wise to pick an option that best meets your unique needs.