There are two main ways to get the cash you need to grow your business:
A small business loan from the Small Business Administration, a program backed by the United States government.
A traditional bank loan
Both loan types are fine to use, depending on your circumstances. SBA loans offered by the government are sometimes easier to get, but often come with tight restrictions and guidelines on how the money can be used.
Larger loans must go through normal loan channels. This requires establishing a relationship with a high-end lender ad come with stringent guidelines.
The loan option you choose will also have a lot to do with the Singapore business loan you are quoted. For instance, SBA loans generally sport a much lower interest rate. Why? Because they are backed by the federal government. This means that if the borrower defaults on the loan, the government will make those payments. This leaves the lender with no risk; therefore the interest rate is much lower.
Standard business loans often offer a longer repayment term, but this too can hike up the interest rate. Businesses with a poor credit rating and narrow profits may also be quoted a higher rate. The stronger the financial outlook for a business, the lower interest rate a lender will generally require for a loan.
Whether you are looking at federally backed small business loan products or traditional loans from a business-friendly lender, the bottom line is that your interest rate will depend a great deal on these important factors:
Your Credit Worthiness.
Your Businesses Profit/Loss Statements.
The Length of the Loan Term.
Your Business Equity
The key to negotiating the best rate you can is to understand what can increase the rate on a specific loan, and what can help decrease it. That way you can position yourself in a manner that will ensure the best possible business loan rate available at the time you apply for your loan.
Chasing your dreams has never been easier with the availability of business loans. Many start up businesses these days can cost hundreds of thousands of dollars in costs, and while many entrepreneurs have a lot of this cash saved on hand it sometimes just isn’t enough to cover all the expenses that come with getting your dream off of paper and producing profits. When the time comes to expand your business, this can be costly as well. Obviously, any up and coming professional knows to keep debt to a minimum when it comes to business, but there are actually many cases where a business loan can be beneficial and even career changing for those who take out a loan.
Build Your Credit
Banks don’t like to go handing out massive flexi loans to businesses or professionals who don’t have a good credit history. So, where does one start building credit? Business loans are great for that, and there are many trusted licensed money lending companies out there who will be happy to trust you enough to let you get your foot in the door to build credit.
For businesses who sell inventory, you have to purchase it somehow. Not all businesses, especially new businesses, have the cash reserves on hand to purchase the inventory needed to start growing their profits. With business loans that worry is a thing of the past, as more and more businesses are opting for loans to purchase inventory for their customers.
Expand Your Business
The time has finally come, your business is beyond popular and customers are calling out for more! More locations, more products, more services; all of this means more money. A business loan is a great option for those who are wanting to expand their business, but don’t have the cash reserves on hand to do so. A business loan can help boost your business’s profitability while you wait for the cash flow to come in from your loyal customers.
There is nothing more exciting to an entrepreneur then starting a new business. Seeing the fruits of your labor and executing your passion is an excellent way to start each day. Unfortunately, all businesses require startup or additional capital when expanding. This likely means you need to acquire a loan which isn’t the most fun aspect of running a business but can be achieved through careful planning and work.
Prior to approaching the bank, follow this simple and practical guide on how to prepare to apply for a business loan. By following these instructions, you should be able to secure a small business loan in no time.
One: Bank Criteria
Different lending institutions have different standards but typically all banks require that the loan be for sound business purposes, you and your business partner have experience in the industry and are of good character and you have the ability to pay back the expat loan Singapore. Strong collateral and having a personal equity in the business helps.
Two: Required Information
Generally, banks need your personal and business credit history and financial statements, cash flow projections for a year or more, personal guaranties from business principal owners and a detailed business plan.
Three: Streamlining the Process
To make the process easier, select your lending institution wisely and carefully. Remember that large banks often shy away from small loans because they are less profitable but require the same amount of servicing. Approach banks that you are a customer of or have worked with in the past. Check out credit unions or local community banks. Also, speak with a lending officer first to determine required documentation and make sure to bring all requested documents.
Four: Standard Small Business Loan Amount
Although small businesses are available in all sizes, the median small business loan is between $130,000 and $140,000 with the highest at $250,000.
Five: How to Secure Financing
Start-ups tend to be the most difficult to secure financing. However, with a strong business plan, enough personal resources for investment and collateral, many community banks will consider lending you money.