In this article, we will discuss the benefits of taking an SME loan in Singapore. Also, we will discuss what to do if your loan gets rejected and some FAQs about a business loan.
What are the benefits of taking an SME loan in Singapore?
SME loan is also called a business loan and is mainly used by people who own their own business. This kind of loan is given mainly to those people who have a small or medium level business. Most of the people that you see here will be having a new startup in the market. Given below are some of the benefits which you can get by taking a business loan in Singapore.
- Low documentation needs
One of the biggest advantages of these loans is that you will need fewer documents to register. If you take a regular loan, you will need a wide variety and different kinds of documentation. You will need things like property deeds, financial statements, a list of owners and shareholders.
The SME loans only require you to bring a bank statement, GST details, and income tax details. These are the documents that are easily accessible and most common in the market.
- Collateral free
This means that most of these kinds of loans you find are unsecured. It indicates you will not have to put up anything as collateral with the lender. As a small business owner, you will know that you won’t have anything to put up as collateral. So, this is a good thing that has been made into their new policy of giving out loans.
These are the loans that are taken for the small business and not the big ones. So, the total amount of the loan is easily affordable by any SME business owner. These loans have been created and launched so that they can make the life of the SME business easy. The interest rates and also the premium is not that much of a big amount for the owners to pay. Interest rates are crafted by looking at the ability of the business to pay back the loan amount.
- Flexible tenure
This means that the tenure of these loans is flexible and can be changed on demand. It is an indication that the lender gives the business owner option to create their tenure of the loan. The terms of these SME loans are anywhere from 6 months to 36 months. Also, the repayment ability is made flexible so that it can suit the need of the business owner.
- No repayment charges
Most of the SME businesses in the market are allowed to pay back the loan amount without any extra charges. This is only allowed when the business owner can pay back the amount on time. If you can repay your debt before the loan period ends, you will have a good credit rating.
- Accelerate business growth and expansion
This loan allows the business owner to use this money to invest it in the business itself. What to invest in is the decision that has to be made by the business owner. The owner can use this money in research and development to create something new. This is a good loan for SMEs as they are not that big and cannot afford high rates.
- Take advantage of business opportunities
The SME loan can help any business to grow and expand more in the market. You cannot simply expand your business without having any money to do so. These businesses can use this money in their new project to figure something out to make money.
- Inventory and equipment
There are many kinds of SMEs in the market, like gyms and also commercial buildings. These are the business that needs to regularly change or bring in new stock for their customers. The most common kind of SME is the gym which needs its equipment to be well maintained. There are also restaurants and café that come under this category.
- Less downside than equity financing
SME get access to more funds than they need and can also save them for the future. The equity financing is done by those companies which are big and in need of much money.
- Grow creditworthiness and reputation
If you take an SME loan and can repay it on time, this will increase the credit rating of the business. You can look at the guide to best small business loan to see how to increase your reputation. This will help the business to make good creditworthiness in the market. This will also increase the reputation of the business in the market as they are known to pay back on time.
What should one do if their loan applications get rejected?
Here is the list of things you need to do if your loan application gets rejected.
- Try again with a different person
If they fail or cannel your loan application due to some reason, you can try another place. There are lots of several banks and financial institutions in the market. All of these will give you different kinds of loans which you want.
- Try alternate source of funding
If your loan is rejected by a bank, then you can try to go to another bank if you want. Or else you can go to a financial institution and get an SME loan for yourself. If you are not able to pay using cash or bank transfer, you can take a loan repayment scheme also.
- Engage a loan broker or consultant
If both of the above options did not work the best for you or your problem. Then you can try to speak with a loan broker or loan consultant. These are the person who might be able to help you get a loan for yourself. This is because many of the banks and financial institutions know these loan brokers. That is because these brokers get paid for bringing in customers to take a loan for them.