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Best business loans
What you need to know about finding a loan that meets the needs of your company.
What makes a business loan the “best”? Well, that’s up to you! Read on to find out more about business loans in Singapore, including their features and eligibility — plus, what to watch out for, and how to compare them.
What makes a business loan the best?
There is no single factor that determines what is the best loan for your business, but rather a range of considerations involved. With the number of business loans in Singapore, it’s important to understand both your business’s current financial needs and the available loan options before you make a decision.
The “best” business loans in Singapore for an up-and-coming startup will be very different from that of an established enterprise. It is, therefore, essential to understand your business’s needs. Here are some considerations you can think about.
- Reason for a loan. This will help you decide what specific type of business loan in Singapore to apply for. Some loans are designed for equipment, whereas others may be used to cover cash flow issues. It’s important to have a clear understanding of the purpose of the loan to narrow down your options.
- Sum of loan. Different business finance options will be more or less suitable for certain loan amounts.
- Size, age and nature of your business. Many lenders have strict criteria that your business will need to meet in order to be eligible for a loan.
What type of business loans in Singapore are best for my business’ situation?
Let’s consider some of the most common business borrowing situations.
- My business has cash flow issues and needs ongoing, flexible access to funding: In this scenario, the best business loans in Singapore would be related to invoice financing, business overdraft and lines of credit.
- I need a cash injection for my business and plan to pay it off within a year: In this case, the borrower could consider short-term business loans or working capital finance.
- My business needs credit facilities for business expenses: Some popular options for this case include business credit cards or a business line of credit.
- My business has outstanding invoices affecting cash flow: You may want to explore your options with invoice financing.
- I’m looking to purchase a new vehicle or business equipment: In this scenario, a business may wish to pursue business vehicle finance or equipment finance.
- I have an asset I can use as security for a business loan: A secured business loan may be the most appealing in this case as you could benefit from more competitive rates of interest.
- I want a business loan, but not from the big banks: Peer-to-peer business loans are great options to consider if you don’t wish to borrow from big banks.
Am I eligible for a business loan in Singapore?
Although each provider may have differing eligibility details, here are some general criteria you should consider to determine whether you’re likely to be approved for a business loan:
- Business registration: Businesses registered in/ incorporated in Singapore tend to be eligible for business loans.
- The age of the business: The majority of lenders require businesses to have been in operation for at least two years before being eligible for a business loan in Singapore. Some alternative and smaller lenders may offer unsecured loans for start-ups and businesses that have been operating for less than a year.
- Credit history: Credit history can be a major deciding factor in the business’s eligibility for a loan. In some instances – particularly where businesses do not have a strong or long enough trading history – the personal credit records of directors and major shareholders will also be considered.
- Turnover: Lenders offering business loans in Singapore need to be convinced that the business will be able to afford loan repayments. Lenders look at a business’s turnover to gauge the profitability of the business and their cash flow situation. This requirement will vary for some loan types, such as a merchant cash advance, which will look at the average credit card transactions of a business.
How do I apply for a business loan?
By now, you probably have a good idea of what type of business loan could be the “best” business loan for your circumstances and can compare loans on the market. Once you have found a business loan that suits your needs, check through the eligibility criteria for that particular lender and loan product to make sure you qualify before you start an application.
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