Guide to Obtaining a Business Loan
Are you thinking about starting a business but do not have sufficient operating capital? Or are you already in Business but have not been keeping the proper book accounts' record and paper work? Or you just need some bank loan as otherwise your personal credit file could not have been able to qualify? Do you feel that bank's loan process is always lengthy and difficult? Well, don't worry, you're not alone! This article will open the door for you to the world of Business Credit and obtaining business funding in less than Two weeks from major Banks and Finance Companies in Singapore
Here I will revealed the important elements and tips of what you need to prepare to pass the bank's checklist and obtaining your desired business loan, in confidence, without doubt and without going through hassles.
In this article, I will categorized the available business loan into Two type, namely, for the young & new start up And for those companies whom did not keep proper accounts/book keeping/paper work of their day to day operation. But of course if you have been keeping proper records it would be much, much easier as you don't have to start building one for the bank to see.
Young Start-up Business Entrepreneur
If you are 18 years old and thinking that you have some ideas to start a business and lack of cash, then you can consider obtaining a business loan from POSB , for up to $50,000 and repayable over 10 years. This is one of a kind of business loan supported by local authorities to promote innovation and entrepreneurship for the young.
Things you must do when you are intending to obtain this kind of Business Loan:
1. Make sure your ideas are in a profitable Niche.(business concept)
2. Engage a consultant to prepare your business plan about your niche. This has to be done professionally, with research & statistic data and convincing points to support that the business is viable.
3. If possible, get some lecturer or Business Director to give a “likes” in your business plan.
4. Make sure that your individual credit file is clean and free from any suit/lodgement. Not even outstanding Telephone bills. You may make check from questnet and credit bureau on the status of your credit profile.
5. All members indicated in your application form must not have any adverse credit records. This will immediately impact on your chances of obtaining a loan.
6. Make sure you prepare all the above steps and bring all documents as stated and apply in person. Banks /Finance companies will assign a loan officer to you. (Normally the loan officer is the banks' sale person and will act as a center man between the applicant and the bank's approving officer) Thereafter, the loan officer will be “The Key” to your loan approval.
7. Please note that if steps 1 to 5 are not done correctly, the loan officer may not even want to entertain you and waste time on you. Show them that you have all the potential of getting a loan.
Small-Medium Enterprise Business Loan
If your company is a locally owned SME with at least 30% local shareholding and Group Annual sales of not more than $100 million, then you are eligible for most types of Loan supported by Spring Singapore.
Some of the more straight forward loan would be a term loan of not more than $100,000 payable over 5 years with interest rate about 6%pa or lower depending on your company's credit profile. It's very worthwhile if you intend to maximize the return of the loan with such low interest rate.
Your company need not be very fancy or branded and as long you are in business for more than 2 years, without any finance suit, then you are sure to get a business loan if you follow my guide. Many local banks are eager to provide you with such Term Loan.
The banks are more willing to extend a business loan to you under this scheme as the risk of default is shared with the government. In fact, it is to the advantage of banks to extend loan more easily and freely as it achieve their objective of “gaining returns” with calculated low risk, plus with insurance coverage over the loan, and also supporting the Government’s movement for entrepreneurship. Therefore, if you follow this steps, you will very likely to obtain a business loan much easier and faster:
1. You must have a bank statement of at least 6 months without bounce cheque.
2. You must try as far as possible to maintain high balance (more than $3k) in your comapny banks account.
3. Your bank statement must show many transactions which include crediting and debiting.
4. If you have an audited account, than great, else you must produce a “financial statement” which indicate that the company is not at loss, and preferably profiting.
5. You must have a reason for the loan. (need to produce a statistic)
6. The loan amount cannot be greater than 3 times your companies' paid-up capital.
7. You must have a physical address and work-station showing your company's presence and you roffice must have a company's signboard
8. You need to have projects or invoice or PO entailing that you are in business.
9. All Directors and shareholder must not have adverse credit records or pending suit.
The above are all that the banks are looking for and if you know how to package and position your company's profile to to pass all the banks' checklist, you are sure to get get loans from various banks and after sometimes, your loan limit will also improve if you have successfully service the first loan.
