A large percentage of Singapore’s workforce is in Small and Medium-sized Enterprises (SMEs). Regardless if they are an accountant, an engineer or a human resource executive, most employees are part of SMEs in Singapore.
If you’re a business owner in Singapore, there may be a point where you will need a business loan to expand or improve your business. A business loan is a good resource that helps you improve your cash flow or fill in the financial gaps for your expansion plans. Investing in your business resources wisely can bring long-term gains.
Here are the common business loans in Singapore:
› Business loan
› SME business loan
› Business loan Singapore
› Fast business loan
› Large business loan
› Business loan interest rate Singapore
› Term business loan
› Business financing
Thinking of expanding your business but don’t know where to get the money?
You’re not alone. Most small businesses in Singapore are looking for ways to grow, and many are turning to financial assistance to make it happen. Below are five reasons why you should get a business loan too.
What Is A SME Business Loan?
Getting a business loan Singapore can be challenging with so many acronyms floating around. SBA loans, MCA loans, and SME loans. To help with the COVID-19 situation, Enterprise Singapore (ESG) introduced 3 different credit facilities to help SMEs in Singapore. They are the SME Working Capital Loan, Trade Loan, and Temporary Bridging Loan Programme. Bue before we dive in further, what exactly is an SME loan?
In a nutshell, an SME business loan is business financing specifically for small and medium-sized enterprises.
But of course, there’s a bit more to it than that. For one thing, the SME business loan interest rate in Singapore is lower than in other business financings. And they can be used for various purposes, from working capital to equipment purchases.
Business Loan Benefits
If you’re looking for a fast business loan that offers both low-interest rates and flexibility, an SME loan might be right for you. Taking a business loan may feel daunting, though it might get better with a complete understanding of business loans and its interest rates. Here’s why:
1. More Control
You might consider equity investment when you’re strapped for cash for your business operations. This financing option entails giving up a portion of your business ownership in exchange for a cash infusion from investors.
Although this could be a viable solution (especially if you don’t qualify for a large business loan), it’s not always ideal. This is because you would essentially give up some control over your company. You can retain full ownership and control over your company by taking out a business loan instead.
It means that you can:
› You can make all the decisions without having to answer to any shareholders.
› If things don’t go according to plan, you’re not putting your assets at risk.
However, an SME business loan has some disadvantages compared to equity investment:
› An SME loan is a term business loan. Therefore, you’ll have to make regular loan repayments, which may impact your cash flow.
› If you default on the loan, the lender could take legal action against your business.
› You’ll accrue interest on the loan, increasing the amount you need to repay.
Despite these disadvantages, a business loan in Singapore can be a better financing option because you can retain complete control over your company while still getting the cash you need to grow your business.
2. Leverage Business Opportunities
The key to quickly leveraging business opportunities is simple: be fast, intelligent, and flexible.
› You need to move quickly when you see an opportunity. This means having the right team in place and making decisions quickly.
› You need to be smart about which opportunities you pursue. Not every option is worth taking on, and you need to quickly assess risks and potential rewards.
› You need to be flexible in how you pursue opportunities. There’s often more than one way to skin a cat, and being open to different approaches can help you find the best solution for your particular situation.
When a business opportunity arises, you need a fast business loan to move quickly.
› If you want to expand your operations, an SME business loan can cover these costs before your competitors get ahead of you.
› An SME loan can also help you purchase inventory or hire additional staff. Having the best employees and tools today can help you double your ROI tomorrow.
3. Get Funding Quickly
Another advantage of an SME business loan is that it can provide companies with funding quickly. In many cases, you can get approved for a loan in as little as 24 hours. And once the loan is approved, the funds can be deposited into your account immediately.
It gets even better:
Many banks and financial institutions in Singapore have integrated Myinfo on their websites, so you can fill in and submit your application in under five minutes.
This is much faster than other business financing options, such as:
› Applying for a government grant: The application process can take weeks or even months.
› Equity investment: It can take weeks or even months to find an investor and close the deal.
› Enhanced reliability: Having Myinfo integrated increases the reliability of the online business loan provider.
4. Improve Your Cash Flow
An SME business loan can also help improve your business’s cash flow because you’ll have more money coming in, thanks to the infusion of cash from the loan. There is usually no need to put up collateral.
Most SME loans are unsecured. That means the loan is not backed by any asset, such as your home or your business’s equipment. This can be a significant advantage for businesses, as they won’t have to worry about losing assets if they can’t repay the loan.
Unsecured, fast business loans usually get you the access to smaller sums. If you want a large business loan with lower interest, you might consider guaranteeing it with collateral or a co-signer:
› The business loan interest rate in Singapore is 7-12% for an unsecured loan.
› Equipment and machinery or commercial property loan guaranteed with your assets have interest rates up to 2.5% p.a.
What else can you consider apart from an SME business loan to aid with cash flow?
Invoice financing is a worthwhile alternative. This option entails selling your invoices to a bank or financial institution at a discount to get cash immediately. The lender will then collect the payment from your customers, and you can get up to 80-90% of your invoice’s value today instead of waiting a month.
On the other hand, business loans are arguably better because you gain access to a larger amount and don’t have to sacrifice 10-20% of your invoice’s value.
5. Build Your Creditworthiness
Many small companies find it difficult to access business loans from traditional financial institutions. The usual reasons are that they lack the necessary revenue or have short credit histories.
However, several specialised lenders offer loans specifically designed for small and medium-sized enterprises (SMEs). This business financing can help your company build its creditworthiness and provide the necessary funds for growth and expansion.
Whichever financial institution you choose, you will show the potential lender that your business is a good credit risk by repaying the loan on time and in full. This tactic will make it easier to access finance in the future and help you get better terms and rates.
But can you take an SME loan to build your company’s creditworthiness even if you’re not expanding or hunting a specific business opportunity?
The short answer is yes because it helps you build your reputation as a borrower. In the long run, this can lead to better terms on loans and lines of credit.
Securing A Business Loan Singapore
Even though it has the word “loan”, it is not exactly a bad contract for the company. A business loan is an excellent way to get funding for your small or medium-sized business. These loans offer many advantages, including quick approval, fast funding, and no collateral. They can also help you improve your cash flow and build your company’s creditworthiness.
If you’re looking for a loan for your business, check out the SME Loan from MPM Capital. We offer funding up to $2 million, with flexible repayment terms. Together with fast applications and easier eligibility, you can get your funding in as little as one business day.
For more information about MPM Capital right now!