Singapore is well-known for supporting small and medium businesses. However, starting a business to reach the masses will require proper planning and a huge outlay of cash. With the current economic situation around the world, getting a loan for business startup in Singapore seems tough. Let’s look at ways of overcoming this.
What is a business startup loan?
A loan for business startup in Singapore is only available for SMEs, MNCs and local startups who need funds for their daily operational expenses, expansion plans or other business-related purposes.
These business loans are pretty similar to personal loans. The only difference is that it uses the business’s income and expenditure statements instead of your personal income data. You have a longer loan tenure period ranging from 1-5 years.
These are some of the common business loans:
a) SME microloans
b) SME working capital loans
c) Temporary bridging loans
d) Business credit line
A business plan and proof of income are the most important documents when applying for business loans with banks and other financial institutions. Make a comparison of the interest rates for the SME working capital loans, business credit line, and all other loans before taking up a loan. Most banks and financial institutions in Singapore have the following requisites.
It must be a Singapore registered business that has been operational in Singapore for a minimum of 1 year with an annual turnover of at least S$60,000.
a) Accounting and Corporate Regulatory Authority (ACRA) report
b) Details of all listed directors of the business- includes NRIC, recent personal income tax assessments, and all assets owned
c) Financial statements for the past few months, including company’s tax assessments
d) Recent business contracts obtained, if any.
e) Company’s bank statements for the past year
Do your groundwork
Preparation is the key to all successful business loans. Do your homework well and have a good strategy when presenting your business plans.
Draw up your personal finances
The ability to manage your personal finances is reflective of your ability to manage your company finances, in the future. This is the key to obtaining any type of loan. It’s important to maintain a healthy credit score by paying all bills and loans on time. If your credit score is unhealthy, quickly get your credit report and fix all issues before applying for any business loans. Banks and financial institutions will look into your financial history to determine whether you’re a good paymaster.
Have a good business plan with detailed strategies, business goals, objectives, ideas, and methodologies. A good plan should include your company’s executive summary, market analysis, marketing methods, organisation chart, financial projections, and your profile.
It’s crucial to illustrate how you plan to utilise the loan to generate profits for your business. This will boost the lender’s confidence in your repayment capability.
Display your professional expertise
This is the time to showcase all working experiences together with your educational qualifications in the loan application. You should explain in depth how your skills and knowledge relate to your business model. Attach a detailed work resume with the loan application as this will increase your chances of getting the loan.
Choose the right lender
Make a list of all suitable loans and visit various banks and institutions to compare the requirements, loan quantum offered, interest rates and all other costs and fees involved for each loan type. Thereafter, make an informed decision.
Finally, you head down to meet your selected lender regarding your loan. Dress professionally as first impressions are important! Be well-prepared for any questions that might come your way. Ask as many questions as possible during this session. If you have taken a loan from the same lender before, your chances of getting a startup loan might be higher based on previous relationships. If you are unsuccessful, you may consider a business credit line.
Although the Singapore government is promoting popular SME loans such as SME working capital loans and SME microloans, the fact remains that these funds are not readily available. On the other hand, banks and financial institutions take 6-8 weeks to process business loans applications.
At Elite Investment & Credit, we understand the growing needs of small businesses and provide competitive SME working capital loans with a process rate that’s simple, fuss-free, and speedy. Apply with us today!