Various Types of Business Loans in Singapore

Business loans are type of loans provided to specific individuals that is currently operating a business or planning to start one. The financial assistance has a specific amount and its interest is either fixed or variable. Admittedly, this definition is broad and this is because business loans vary and owners need to decide which type of loan would be beneficial to their business. For most business owners who are just starting out applying for a business loan from banks and other lending institution may be a little difficult because there will not be any kind business credit rating to show for. In cases like this, the business owner’s only recourse is to apply for a personal loan the proceeds of which can be used for their start-up capital. As soon as the business gets off the ground, the business owner can start paying off the personal loan and this will finally give him the chance to apply for a much bigger business loan from any Loan Company.

Before a business newbie can apply for any commercial loan, he needs to first establish his business credibility and this can be done by opening up a business credit card account and always paying for the entire loan amount whenever it is due. This will help build the credit rating and history of the business.

Second, start buying business equipment and supplies from companies that will give the business a good standing report with Singapore’s Business Credit Bureau and third making sure that the trade has a good business plan with good potential options to earn a reasonable amount of profit, have various letters of intent and types of customer contract already laid out for implementation. Once you’ve establish the business credibility, the business owner can now start contemplating on what type of loan would be beneficial for his business.

The various types of business loans Singapore now available in the financial market of Singapore are the following:

  • Terms Loans-this type of loan have a fixed repayment term, interest rate, requires collateral and usually have a fixed monthly payment. This can be used to purchase equipment and other fixed assets for the business.
  • Lines of Credit loans-this is a type of loan that allows the lender can provide a loan against anything of value that business owns such as building, lots and other form of valued assets. Lines of credit are usually more fluid since the loan is not exact and you may not need to use the maximum amount that the business is allowed to borrow.
  • Factoring or Accounts Receivable Factoring loan-this type of loans allows the factoring institution to buy the business accounts receivable amounts and proceeds to collect on them at a future date and under normal terms. The purchase cost for the accounts receivables can have as much as 97% value, allowing the factoring company (Loan Company) to earn 3%.

Small Business Administration Loans-this type of loan was designed to help in the progress and growth of small businesses. If you cannot qualify for loans that goes through traditional banking processes this type of loan can be of help via one of their three programs.

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