As an entrepreneur, you must have an idea of how difficult it is to secure a loan. In spite of the many financial options in Singapore, lenders can be wary especially if your business is new.
Lenders have certain requirements and eligibility criteria that can make or break your chances of getting a successful loan. Thus, if you want to know how to qualify for a small business loan, then you need to know what to do, what you need, and what you should prepare.
There are many financing options that you can choose from in Singapore. You can choose from a bank, moneylender, angel investors, venture capitalists, grants, and among others. While their requirements and terms of payment will vary from each other, it is important to choose a lender who can offer you the most flexible terms and agreements. However, for discussion purposes, let us only focus on banks and moneylenders.
WHY DO YOU NEED THE MONEY?
First and foremost, it is important to ask yourself why you need to avail for a business loan. Are you looking for a short-term or long-term financing? You have to be specific with the usage of the loan. By doing this, you can determine the amount you need and where you should apply. You have to take note that banks and moneylenders will assess the amount depending on the size and profitability of your business.
ASSESS YOUR CAPABILITY TO PAY (CASH FLOW)
Before you avail for a business loan, you should be sure that you can pay back the money when it is due. Banks, moneylenders, and other kinds of lending institutions can penalize you if you are late in paying. You should be especially careful if your loan comes with collateral. Thus, you should manage the loan well. You have to make sure that you have a steady cash flow that can give your lenders assurance and security.
Thus, this is where your financial statement comes in. Your financial statement can show your assets, liabilities, debt, and cash flow. The financial statement is a basis for lenders as to whether your business is profitable or not.
MAKE A DETAILED BUSINESS PLAN
Having a well-developed business plan will not only help your business, but it can improve your chances in availing for a business loan as well. Lenders, especially banks, want to see a detailed procedure that outlines your business. Banks want to see a business plan that assures them that your business is profitable or will become profitable.
DO YOU HAVE A COLLATERAL?
Yes, some business loans need collateral, which can be your car or home. Most banks may require you to have collateral depending on the amount of your loan, credit history, and size of your business. On the other hand, most moneylenders in Singapore do not require you to have collateral when making a business loan. However, to be careful, you should still ask the moneylender.
PREPARING THE NEEDED REQUIREMENTS AND DOCUMENTS
You should know what are the qualifications and requirements, whether you are going to choose a bank or a moneylender. To provide you with a general idea, here are the documents and requirements that most banks and moneylenders may require from you. You should note that these requirements and qualifications may varyfrom one institution to another.
- Business registration – Must be a Singapore-registered company. Some banks and moneylenders require a period of operation of 2 years, while some require only 6 months.
- Annual revenue – The amount may vary from one lender to another
- Business ownership – Percentage owned by a Singaporean may vary.
- Income Tax
- Financial statements/Bank statements – Coverage period may vary, but banks or moneylenders may require to see the statements of your company for the last 6 months.
- National Registration Identity Card (NRIC)
If you are looking to make a loan, it is important to choose a bank or moneylender that has requirements you can meet. It is important to note that some lenders can be cautious and may even refuse to grant your loan if your business is new. Thus, choose a bank or moneylender that can be flexible and less stringent with their requirements.
TAKE A LOOK AT YOUR CREDIT SCORE
Some people underestimate the importance of their credit score. While some disregard their credit score, future entrepreneurs who have a bad credit score might want to rethink about this. Some or most banks in Singapore can refuse to loan you money if you have a bad credit score and history. Most banks have set a credit score range to determine the credibility and capability of your business. Thus, before you make a loan, you must check your credit score and history. On the other hand, other banks, and most moneylenders can loan you money regardless of your credit score and history.
If you want to improve your credit score and history, then you might want to start paying off your debts and stay away from incurring new ones. Set a reminder regarding the due dates of your credit card bills and loan. Also, if you are having trouble managing your debt, then try to avail for a debt consolidation plan.
LOOKING FOR A MONEYLENDER IN SINGAPORE?
Finding the right and reliable moneylender in Singapore can be difficult. With all of the moneylenders to choose from, it is difficult to choose the right one. However, you should look no further. With Bugis Credit, you are sure to get one of the best deals for your business! The company will help your business succeed. The company is open for inquiries, and will entertain walk-ins and online transactions.