What Are Your Financing Needs?
There are many factors to consider when applying for financial loans. Some important factors to take note of are, your business growth potential, ability to repay the loans, and interest rates of the loans you are taking. You should consider all these factors and prerequisites before applying and accepting loans. Often, there are also instances that small business owners fail to repay these loans and interests on time. This may fail in your business and permanent closure.
Applying for loans may be a tedious procedure, thus it would be advisable to seek a professional service provider for assistance when going through this process. Paul Hype Page has worked with many small businesses during our course of operation. We know the minute details when it comes to loan applications, and we can assist you along the way. Most importantly, we have the industry insight to the appetites of different banks, and which would be most suitable for you.
Here are the major financing options available:
Short-Term Financing Options
Short-Term Financing Options are recommended for small business owners who require sufficient cash needs for daily operations. These include rent, wages, and utility bills. However, there are huge downsides to short-term loans as well. As these loaning options provide you with ‘quick cash’, they come with a higher amount of interest rates as well.
The invoice financing loan option is perfect for small businesses that have already issued a notable number of unpaid invoices to their clients. Small business owners will then file their unpaid invoices and apply for an invoice financing loan. The lender will then loan, and charge interests based on the number of outstanding invoices.
As there will be money coming in for small business owners due to unpaid invoices, invoice financing interest rates are relatively smaller and less risky than other short-term financing options. This allows lenders to loan small business owners with more assurance.
This loan option is the most common among small businesses. In most cases, small businesses would require a bigger capital for the company to grow. In Singapore, the Micro Loans’ options may provide a significant sum for growth. This sum is beneficial for small business owners with immediate financial plans. These include hiring more short-term staff, making new investments, or purchasing more equipment.
However, Micro Loans generally have a higher interest rate. Lenders do not have control over their loans as small business owners can use the loan amount for many purposes. There are also no fixed requirements for their expenditures using the loans. Thus, small business owners should consider the pros and cons of high interests and proper fund usage when applying for Micro Loans.
Working Capital Loan
The working capital loan provides the financial capability for small business owners to pay for their everyday operations. It is feasible for small business owners to cover some of their short-term financial needs such as employee payroll, any outstanding debts, any rental or utility bills.
While a working capital loan provides a larger amount of loan funds, there are many limitations to this loan. These loans are not able to purchase long-term assets or be used in any form of investment.