Business Loan Myths In Singapore Busted

Business Loan Myths In Singapore Busted

Business loans can be a good source of money to help you run and grow your business. This type of loan can be used in the purchase of business machinery, new premises, finance your company or for paying your employees bonuses and salary.

When applying for a business loan from licensed money lenders in Singapore, it is important that you have a clear outline of how you plan to use the money once your loan has been approved. By so doing, your money lender will be able to get a clear picture of how you intend to use the borrowed money.

When a bank has turned your loan request, you may get worried that this spells the end of your business. There are numerous business owners in Singapore who unaware of the concept of Singapore’s private lending companies. They miss this helpful option because of the misconceptions floating around. When you are in urgent need of funding for your business, but you are not sure about of how you can get your business loan accepted.

The below pointers will help you clear some of the doubts you may be having. Read through the points below to identify whether some of the mentioned ones may be preventing you from getting a business loan from legal moneylenders.

Business Loan Myths In Singapore Busted

Only Banks Offer Business Loans

Under normal circumstances, most SME in Singapore usually turns to banks as well as other similar money lending institutions for money. This could be the custom in the industry you are in, however, rest assured there are many other options for you that are worth exploring.

Besides the banking institutions, licensed private moneylenders also offer working business loans to borrowers. These moneylenders also do so with little paperwork attached to the loan application process. Once you have presented all the necessary documents, you will be able to access your loan money within a week.

Of importance is you take time to shop around for the right business loan for your business. Compare interest rates offered by various licensed moneylenders in Singapore before settling for one lender. And always make sure you read and understand the loan contract before signing. Also, make inquiries about any charges that you might incur in case of late and early payment and any other charges included during the loan processing.

A Perfect Credit Score Is Needed To Have The Business Loan Approved

Having poor credit scores can create an obstacle when you are seeking to raise money from banking institutions or through government-issued grants. A lot of Singaporean licensed money lenders will on many occasions approves your loan even when you have a bad credit score. This is provided that you are able to satisfy a number of business loan requirements.

Some of these requirements range from business size, annual profits and revenue, type of industry, business age and cash flow. Therefore other factors are considered by moneylenders besides your credit score making them a reliable option for your business loan needs. So do not hesitate to contact your nearest licensed moneylender to see what they are able to work out for you and help you meet your financial business requirements.

Lenders Prefer Giving Large Company Loans Than SME Loans

Although legal moneylenders in Singapore do profit from working with huge advances and long-term loans types, they work and are open to doing business with different types of establishments available in Singapore both small and large. Therefore do not allow this misconception stop you from looking for SME funding from them.

Look at Focusing instead on the cash flow as well as your ability to pay off the debt for you to know the amount of loan money you have to borrow. You can seek financial advice from the moneylenders to help you know the best loan type for your business they may have for you. Even then they are ready to support you on your journey as you grow your business.

All Private Moneylenders Are Scammers

Although well-meaning some well-wishers could advise you on getting your business funds from banks only, while your company stagnates and suffers from lacking a much-needed financial boost. However you should not let past, bad loan experiences cloud your perceptions of getting private funding. Once you decide to work with moneylenders in Singapore, choose reliable and the licensed lenders over the unlicensed hacks. Licensed moneylenders follow the right business practices and are professional. Through them, you are able to get your business loans under reasonable terms as well as on time.

Focus Only On Interest Rates

There are individuals who solely apply for loans based on the loan’s interest rates. Even then you are not the only one who makes such a crucial lending mistake. Although you need to choose lower interest rate loan, it is important that you consider other aspects of a loan as well. These may include processing fees, loan amount, monthly instalments, tenor, penalties on missed and delayed payments, prepayment charges, hidden charges, and loan extension plans.

Unsecured Loans Have Strict Payment Plans

The long-established bank loans often come with fixed loan tenures as well as EMI rates. Using the bank loans you will be repaying the money on a set schedule, regardless of how your business is doing. This can be challenging for a small-scale business or if you produce seasonal goods since your business has its flows and ebbs. This can greatly affect your ability to repay and it puts a strain on the finances. However, working with a licensed moneylender, you will be able to get a flexible repayment plan and loan tenures based on your business needs. Therefore choose short-term loans for passing cash needs.

It’s Hard Getting Funding For Startup Businesses

Most small businesses in Singapore, unfortunately, believe this myth. Business partners and Individuals miss out on chances of turning their ideas into reality as well as expanding their growing enterprise. Some licensed moneylenders give loans to startup businesses and may well fund your advertising campaigns. These loans will range from the short-term SME loans to the start-up loans for the salaried, self-employed and contract individuals.

How Do You Manage Your Loan Repayment?

How Do You Manage Your Loan Repayment?

Taking out a personal loan can be a scary for some individuals. Regardless of the interest being charged, both high and low, a personal loan is a debt that might burden your finances. This can create obstacles to your journey to attaining financial freedom. Even though taking loans is often the last option on anyone’s mind, there are situations that do call for the urgent need for cash that personal loan offer.

Often times people take loans for different reasons such as to finance a business project and for the need of a home. However, once received, a lot of borrowers are troubled by the matter of managing their monthly loan repayments.

Some borrowers have shocking stories to tell regarding loans stretched out till their retirement, late EMI’s, heavy penalties and even the harassing calls received from their moneylenders. The one reason that makes people face difficulties when repaying their loans is a lack of planning their finances.

By taking a closer look at the outflow planning and financial health of your money will help you settle the matter of personal loan repayments. When you have recently taken out a loan and you have a difficult time managing them, below is a short guide that will help you manage the repayment of your personal loan.

How Do You Manage Your Loan Repayment?

Prepare A Monthly Budget

Having a working budget is always useful as you work towards gaining financial freedom. Drawing up a monthly budget will greatly ease your loan repayment plan. Make sure you list down your expenses for the month as well as your income, including small details of everywhere your money goes. This will come in handy as you analyze on areas that you need to cut back on to help pay back your loan much faster. Additionally, you will get an idea regarding your savings and salary that will assist you in prioritizing your loan repayments.

A key point to take note of is ensuring that your debt commitments for the month do not go above 35% of the gross monthly earnings. Always be aware of this every time you are requesting for loans as it can be useful.

Prioritise Settlement Of The High-Interest Loans

Although the repayment of a single loan is a lot easier, lots of Singaporeans face some difficulties in managing several loans. The reason for this is that many people fail to rank the repayment of their loan even after they have drawn up a budget. The reality that you hold a debt is certainly a burden, but what adds-on the pressure are the interests charged. The higher the interests charged, the more the pressure to repay the debt. Reducing the total interests being paid on all your loans can help ease up the weight of your finances.

A helpful strategy is the use of a debt avalanche. This strategy works by you putting a maximum amount against the high-interest loans without affecting the repayments of the other loans. You will first need to list all your loans along with their interests. Then allocate the highest amount of the loan that has the highest interest such as credit card bills. Once that is cleared, move to the next using the same strategy. This strategy will help simplify debt management for you.

Increase Your Regular Repayment Amount

If you have recently received a pay rise or a fat bonus you can use it to pay off some of your debts. Gains will come in a variety of ways such as bonuses, pay hikes, profits on some of your investments, tax refunds, etc. putting some of your financial gains to repay debts can help ease your financial obligations.

Every time you have extra cash to spare, contact your moneylender asking whether you can increase your instalment. If you have accumulated a good amount, you can even consider paying off in a lump sum. However, ensure that no penalty charges are attached to your early payment.

A few loans may have conditions such as penalties on increased or early repayments, therefore be giving an advanced notice ahead of increasing regular payments. Make sure you confirm with your licensed moneylender during the contract signing phase.

Use Schemes And Investments For Debt Commitments

Debts are divided into two; bad and good debts. Debts with a futuristic monetary gain or that pay you are good. But debts that don’t bring gains to your economic value are in fact a burden. Debts like car loans and credit card payments are bad and only add a load on your financial commitments. Although using other investments or your retirement savings is typically the last choice, they might be helpful if your debts go beyond and you are near insolvency.

Furthermore, Singapore provides some schemes such as Debt Management Plan, Debt Consolidation Plan, and Debt Repayment Plan to individuals who are struggling with repaying their debts. While DRP and DMP help you to repay your amount outstanding, DCP merges all your debts owed from different money lending institutions into a single debt to help you reduce your monthly commitments. Be sure to read through the conditions and terms of your investments along with those of the schemes to ensure you get the right one.

Adjust Your Lifestyle To Help Repay On Time

Expenses and your spending practices can affect the ease with which you repay your loans. Besides the above-mentioned guidelines, there are other habits that will ease your debt obligations and bring you closer to achieving financial freedom.

Check your spending practice to identify how you often use any extra cash you get. If you, however, splash your money aimlessly instead of putting it down on clearing debt then you could do with changing your lifestyle. Work towards trimming your expenses such as movies, shopping, and dinners, so that you are able to repay your debts faster.

Balanced financial habits are great, but ensure you prioritize your obligation in alignment with your goals. By being aware of these strategies it will be easy for you to manage the process of repaying your personal loans. Maintain balance is the answer. Adopting healthy financial practices will guarantee you become debt-free and achieve financial freedom

4 Misconceptions Borrowers Have About Loans

4 Misconceptions Borrowers Have About Loans

Most people do make the use of loan from time to time. It could be a home loan, study loan, personal loan or even a car loan. Although most people in Singapore consider study loans and home loans to be essential forms of loans because of the purpose and the amount.

There are individuals who will be more undecided when it comes to getting a personal loan. Them being undecided could be coming from the idea that taking out a personal loan needs to be considered as a last result. Or it could be to them getting a personal loan means a person has got into a desperate state thus they opt to use credit cards for purchases instead.

In addition to that, there are some Singaporeans who think that it will be hard for them to have their loan request approved. For varied reasons most people don’t trust that they are able to get personal loans from licensed moneylenders in Singapore. Even with the different reasons, it is important that you take the time to understand the different ways a personal loan can work for you by contacting your financial advisor or moneylender near your area.

Below is a quick look at some misconceptions that once clarified, you will be able to see the benefits of you taking out a loan.

4 Misconceptions Borrowers Have About Loans

Borrowers Require Good Credit Scores

In Singapore, having a good credit score is certainly very important, especially when you want to get a loan from the banks. What most Singaporeans fail to consider is the fact that there are other options open for them when accessing a personal loan is concerned – accredited moneylenders.

Licensed Moneylenders maintain a credit bureau of their own. And are a bit more relaxed when they are considering your creditworthiness based on your credit score. The legal moneylenders also rarely reject borrowers loan requests unless they have past records of defaulting on their repayments.

Each Lender Provides Similar Interest Rates

It is easy for many people to think that in Singapore, most money lending institutions give their borrowers the same interest on the loan in order for them to remain competitive. But this is not even the case here. Starting with personal loans to home loans, the different moneylenders available in Singapore offer varying rates. And it should not come as a surprise that other factors do come into play in affecting which loan type a borrower will eventually apply for.

Also, it is important to note that many money lending institutions will offer varying loan interests depending on the level of credit risk status you hold. This risk status may be based on your financial needs, ability to pay off loans, as well as ability to provide collaterals. The lenders in most cases want to know the risk level you are as a borrower and they are able to recover their money once it has been lend to you.

You Have To Be Employed To Get A Loan

Although having a steady job is a requirement when getting a loan from money lending institutions, it is not the state for you to qualify for a loan. As long as you can prove your ability to repay the loan taken, most moneylenders are willing to work with you in helping you find the suitable financial solution for your needs. This is in particular regarding a lot of startup entrepreneurs as they may not have adequate savings to cover them during the startup phase, or they could risk facing cash flow problems.

For those individuals who are self-employed, they are able to request for loans provided that they present income tax statements and an official proof of income to the money lender they are dealing with.

There are useful schemes available in Singapore like Business First Loan, a collateral-free business loan offered by Singapore’s SPRING Micro Loan Programmes. This programme is intended for new business startups to be able to get funding in the fastest and in a hassle-free way. It comes with a flexible repayment time of 4 years or less. However, you will need to have a guarantor and be able to let the bank review the financial status of your company.

You Must Always Get A Loan With The Lowest Interests

As earlier mentioned, it is possible for you to have more than one feature to consider when you are thinking of taking out a personal loan form a legal moneylender. Although interest rates are equally important criterion you need to consider since it determines the general borrowing costs, there are other factors that you will have to think of. These include administrative and processing fees, loan tenor, prepayment penalties as well as the ease of your application process. All these factors will greatly affect your choice of loan type you end up making use of from a moneylender.

Given that you want to take out a loan amount of $5,000 which you intend to pay off within 3 months. It is important to consider if you would rather pay a somewhat higher interest and have the loan repaid in three months or opt to stretch out your loan tenor to about a year with which you will get a slightly lower interest rate.

Bearing these aspects in mind will help you make a better-informed choice. As you will choose the one loan that will offer you the best deal, convenient loan period and manageable monthly instalments.

Conclusion

There are individuals who will be more undecided when it comes to getting a personal loan. Their indecision could be coming from varying misconceptions which will make them hesitate to take out a personal loan. Some of these misconceptions many people face in Singapore include; you have to be employed to get a loan, borrowers should have good credit scores, each lender has similar interest and you should go for loans with the lowest rate.

Even with such convictions, it is important that you gain an understanding of what your financial needs are and what a loan can mean for your financial health. And above all always take loans you are able to repay with ease and on time.