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A Guide to Options of Small Business Loan in Singapore

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A Guide to Options of Small Business Loan in Singapore

2021-01-27T16:44:53+08:00August 14, 2020|0 Comments

When starting a new business in Singapore, there are times when money can become an issue for business owners. Apart from applying for government grants, one other way to manage this issue is to get loans for your business. Options for loans are plentiful, ranging from cash flow management to even equipment purchasing loans. To consider a financial loan, you must first understand what the needs of your business are.

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.

Invoice Financing

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.

Micro Loans

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.

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Long-Term Financing Options

Small businesses who are seeking long-term financing options often tend to utilize these loans to facilitate their expansion. With short-term financing, small businesses are more inclined to repay the loans immediately, as the interests may pile up.

Long-term financing options generally provide a larger sum of funding, with a longer repaying period and lower interest rates. Long-term financing options also provide more stability in your loans, as there is lesser pressure on repaying the debt immediately.

Business Loans

Small business owners who apply for business loans will receive a lump sum payment, with interests and payment dates ranging over a set period. This provides more flexibility when repaying the loans and can fully utilize the additional funding for business expansions. The main advantage of a business loan is that business owners can utilize the loans for various purposes. There are no fixed requirements for the expenses with the loans.

However, the funding is generally processed slower than other short-term options. This will ensure that business owners utilize the funding properly, and not use all of it in a short period. Business loans are viable for entrepreneurs that need a significant amount of funding over a huge time frame, without worrying about diluting ownership by introducing third-party investors.

Asset-Based Lending

For new businesses, it would be difficult to secure larger loans to purchase assets. Using asset-based lending, small business owners can fund their assets with a lower interest rate. These assets include vehicles, IT equipment, and office equipment.

As there are assets present, loaners are willing to offer funding at a lower interest rate. These assets act as collateral, where loaners can acquire the assets during instances where the business owners are unable to repay the loans on time.

Apply for your loan with Aspire Bank

Depending on your needs, ASPIRE provides flexible financing options for small business owners. Whether you need cash flow to launch a new business, or you need quick cash to acquire a new machine, rest assure Aspire has the options for you. Among the small business loans offered by Aspire Bank are:

  • Small Business Line of Credit
  • Term Loans
  • Small Business Administration Financing

For more information, check out https://aspirebanks.com/business/.

Which Financing Loaner Should I Engage?

When planning for loans, it is important to ask yourself the needs for your loans. While bank loans generally provide a lower amount of funding that crowdfunding or legal money lenders, banks provide a lower interest rate than the other options.

If you are looking to expand your business at a short-notice, engaging with crowd-funding or P2P lending may increase the sum of funds that you can access. However, it is also important to map out your revenue and expenses when engaging with loaners with a higher interest rate. Not being able to plan for your future expenses will fail in securing revenue for repayment, and it might even result in the closure of your business.

To ensure that you can secure the right funding for your business expansions, you should consult a professional service provider for more assistance. Paul Hype Page has worked with various financing institutes over our 12 years of operation, and we can provide the necessary expertise to guide you along with your financing options.

A Guide to Options of Small Business Loan in Singapore FAQs

Is there any loans available for startups?2020-11-11T15:13:27+08:00

Unfortunately, most banks do not extend any loan to startup. Your business must be at least 6-12 months to apply for a loan.

What are the important prerequisites that I should take note of before applying for loans?2020-11-11T15:13:17+08:00

You should understand the many underlying fees that may account for part of your financial loans. Some underlying fees include an application fee, interest fee, late repayment fee, early repayment fee, issuer fee. By mapping out the different fees that you must incur monthly, it will be a lesser hassle when planning for your finances.  

What are my chances of securing loans?2020-11-11T15:13:13+08:00

To ensure your chances of securing loans, you should provide all the necessary documents that loaners require. Some of the documents include a bank statement, the company’s finances, the company’s assets, a notice of assessment. These documents will provide credibility for your business and will secure the maximum amount of loans available.

How much loan can I secure with short-term financing options?2020-11-11T15:12:45+08:00

For short-term financing options, you can secure Micro Loans for up to SGD$100K and the working capital loan can provide you loans up to SGD$1,000,000. It is important to know which are the loans that your business requires.  

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