We hear about business loans all of the time but what are some things to consider before applying for a business loan in Singapore? The four tips below will help clarify basic areas of interest in considering a lender and loan application.
Qualifying: Since funding comes from various banks, individuals, or organizations you will have to qualify for a business loan. Know that your application will be passed through the hands of an individual(s) who is representing the lender. The job of that representative will be to take the information that you have presented in your application and process weather or not the loan is justifiable in purpose and if they can expect repayment of the money loaned.
Business and perhaps personal credit can be checked on behalf of the applicant and any joint business owners. The representative looks for an easily legible business plan, clear and concise documentation of why the loan is needed, and how the loan will be repaid. A contingency plan is always welcome as well in considering loan repayment. Keep in mind that you are the expert of your business so it is your job to produce a neat, organized justification of loan, and repayment plan.
Amount: Keep in mind three words, need, variables and priorities. If you need to add floor inventory keep in mind all variables and expenses that may accrue then prioritize them appropriately. This helps justify the amount needed in the business loan that is being requested. Make sure there is documentation of the specific need, all of the variables involved, and why it is prioritized in that manner. Then attach a cost to each variable. Make sure your entire field of vision (operational, financial, and developmental) is clear in assessing related costs.
Interest: How many times have you heard the phrase, “interest rates may vary”? Keep in mind political climates, credit history, status of the Federal Reserve Bank, and presence of any collateral.
Repayment: Repayment amount includes the entire amount of the loan plus the interest accrued. Payments are usually set in a certain time allotment. The repayment schedule depends closely on what the loan is being used for. Some loans have equal payments per time period, others may have a balloon payment. Know your numbers and time frame involved in repayment of any business loan.
Consider these four areas along with your business credit in finding a business loan Singapore that is comfortable and profitable to your business.