Common Myths about Business Loans in Singapore
We are all aware that for any business to grow, a lot of finances are required. In many instances, firms are unable to raise enough working capital. Insufficient funds are a major hindrance to their growth. In case you find your business in such a situation, it is always advisable to consider outside funding – such as a business loan.
If you are a resident of Singapore, it is advisable to consider outside financing from numerous lending institutions and not depend on one type of financing. However, there are many misconceptions that people have concerning business loans; most of which are not true. Here are several common myths that often deter people from seeking business loans in Singapore:
Myth #1: You Must Have a Clean Credit Score
Any business owner in Singapore should know that some licensed lenders don’t consider the borrower’s credit score. All they need are certain documents required to approve and process a loan. That is to say that if you have a bad credit score and are in dire need of financing to boost your business; most lenders will still be willing to provide you with the funding you need.
Myth #2: The Loan Approval Process takes Too Long
This myth regarding the long process is mostly associated with the screening process that banks undertake before approving a loan. What you don’t know is that other lending institutions in Singapore can get you the money faster than banks. While the bank loan approval process takes a couple of days, we are glad to inform you that some private lenders can process your loan within hours.
Myth #3: Moneylenders prefer Large Company Loans over SME loans
There is a common myth about moneylenders preferring big corporations, because of the big bucks they bring the lending institution. This is an untrue line of thought. Moneylenders in Singapore are not concerned with the size of your business. They are, however, concerned with your enterprise’s cash flow and your ability to repay the amount borrowed.
Myth #4: You Should Focus on Interest Rates
Mostly, you may find yourself applying for a loan based on your firm’s loan interest rates. Many borrowers find themselves in the same pit. As such, you need to know that there are other factors worth considering. However, it is imperative that you ensure that the loan you choose has a lower interest rate compared to others.
Myth #5: It’s Hard for Startups to Get Financing
Licensed private moneylenders cater to your financing needs, regardless of the size of your business. Their major concern is that you, the borrower, have a valid employment license.
In Singapore, there are certified lending institutions that can give loans to startups. Such loans can help fund your startup’s initial operations such as a marketing campaign. You should consider loans such as these to promote the success of your new business. In Singapore, you can access start-up loans to finance a contract or operate an SME.
Myth #6: Private moneylenders Charge High Interest Rates
This is another unfounded truth about business loans held by most people. It is unlikely for a borrower to be duped by private lending institutions unless he or she approaches uncertified business loan sharks. There’s also a common misconception that if you borrow online, you’re taking a big risk and will be charged higher interest rates. Nothing could be further from the truth; all you need to do is make sure you’re dealing with a licensed lender.
Myth #7: You can Borrow as Much as you Want
Before you apply for any business loan, it is imperative that you determine why you need the loan and what exactly you intend to do with the loan. There’s a common misconception that if your business is in a position to borrow more than you need, you should go for it. Well, such a move will only land you in serious debt.
Moreover, you will have to pay more interest on money that you do not need. The only exception for borrowing more is if you intend to use the money for other business-related purposes.
Myth #8: The Payment Structure of Unsecured Loans is Inflexible
Small businesses and startups may suffer because of unstable cash flow. As a result, they need to seek outside financing. Unlike traditional lenders, private money lenders can offer you flexible loan repayment plans that suit your business requirements. Just shop around for the best deals and you’re likely to find something that matches your needs.
Myth #9: You can Use a Business Loan for any Reason
Everyone should know that when he/she uses a business loan for any unspecified purpose, he/she is likely to get penalized. Lenders need to be assured of a borrower’s ability to repay the loan. More so, specifying the loan’s purpose increases your eligibility.
Myth #10: Having another Loan could affect your Business Loan Credibility
Many business owners have been falsely led to believe that they may not be eligible because of an existing loan. Certified moneylenders, however, cannot dismiss your loan application because you have another one. They have to consider other factors. They can only reduce the loan amount they offer if you have a huge debt.
Myth #11: Your Business Loan Requires Security
You should know that there are two kinds of loans; secured and unsecured. Mostly, Singaporean banks are the ones that demand security. You can get a legally-certified moneylender to offer you an unsecured loan. To do this, however, they consider other factors.
Many misconceptions exist concerning business loans in Singapore. These myths can mislead business owners and inhibit the growth of businesses. As a business owner in Singapore, you should be wary of myths that relate to business loans because they will only discourage you from seeking the financing that your business probably needs.
Take the initiative today and contact a licensed moneylender to get the financing that your firm needs!