Many businesses often find the lack of capital a critical issue when it comes to expansion plans. If you need to expand your business, you will probably need more money than your business has made in the period of operation. Getting a SME loan remains one of the easiest ways to get the money you need to boost your business. However, securing an SME loan in Singapore has been and still is a major issue amongst many SMEs. You might find the process daunting and even wonder where to begin.
But, you should not let the worries hinder you from expanding your business. With proper knowledge, you will find the whole process simple and get exactly what you need for your business. There are certain questions one should ask when it comes to obtaining a SME loan in Singapore. They include:
1. What criteria do banks and financial institutions look for while applying for a SME loan?
It is essential to understand what the banks and financial institutions are looking for at your company when it comes to securing an SME loan for your business in Singapore. As different banks and financial institutions have different sets of criteria, SME owners are usually buffered as they are not able to figure out the reason(s) when there is a failure to acquire aSME loan. The basic factors include but are not limited to:
- A legitimate and profitable business
- Company should not be dormant at any point of time for the latest 6 months
- Your business and personal assets should show your ability to repay the loan
- A good personal and business credit history is advantageous
2. What documents will be required?
Different types of SME loan will require different set of documents for application. Generally, these are the documents required from any SME for an SME loan in Singapore:
- NRIC of the Director(s)
- Latest 2 years Notice of Assessment (Income Taxes) of the Director(s)
- Latest 6 months Company Bank Statements
- Latest 2 years Audited or Management Financial Reports or Statements
3. What is the typical size of a SME loan?
For businesses less than a 20 million turnover can typically qualify for up to $500,000 to a few million in terms of unsecured financing which is still subjected to approval based on an overall financial assessment. Businesses that have a turnover higher than 20 million are categorized as a medium enterprise and are evaluated using a different criteria.
- One important thing you should be careful with at this point is the amount of money you need. Do not be convinced to take up more than your business needs just because you can. It is better for you to understand theSME loan that is granted to you or else you will be paying interest on the money you do not need.
3. How can the whole process be simplified and made quicker?
With more time vested in the loan application process, more opportunities are lost. In simple terms, time = money. Thus, here are three steps to facilitate your acquisition of capital.
- Recognize your needs: be sure of what projects you are planning to take up and how much exactly do you require
- Plan your budget: check and make sure that amount that you want to acquire offers a monthly installment that you are able to afford. Else, explore a longer period or tenure to lower your monthly commitments
- Execution: seek for the right platforms that offers the most competitive interest and is able to obtain you the quantum you are looking at
Note: if it is your first application, you should consider learning more about SME loan to enhance your understanding prior to the actual discussion with any banks or financial institutions. Being more knowledgeable about the topic will allow you to understand the current limitation(s) of your company and prevent any application(s) that brings negative results.
Likewise, you can turn to loan brokers that can provide you with a one stop solution of the above mentioned and avoid unnecessary hurdles. SME loan brokers can help you minimize the amount of time and hassle spent to understand the application protocols and criteria to approval, finding you the most competitive interest to match what you are looking for.
Capitalize is a corporate loans specialist firm that helps Small Medium Enterprises (SMEs) and individuals to seek, source and obtain capital from across our established network of up to 30 banks, financial institutions, funding houses and alternative platforms. We are always committed to provide our clients with the most suitable loans according to their needs, from the lowest interest rates possible and at the quantum they require