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People require business loans for various reasons. These are starting a new business, buying machinery, expanding operations, managing cash flow, accelerating the company’s growth, or even repaying existing business loans.
Regardless of the reason, there are two options for applying for a loan: banks and private lenders. Banks usually deny applications for many reasons, including bad credit scores, insufficient work experience, poor collateral, risky industry, or previously existing debts.
The best option for obtaining business loans is approaching licensed moneylenders like A1 Credit that process your application quickly and provide you with money in the least time possible.
Most small and medium enterprises (SMEs) prefer lenders because they offer a package with minimal requirements. They are the only option for struggling businesses with bad credit scores.
While banks grant loans to businesses with a credit score of 720 and above, licensed lenders don’t consider that when reviewing the application. Instead, they rely on supporting documents provided by the borrower.
If you run an SME and are considering contacting a lender, you must know some things before proceeding. They will make the entire process easier for you, especially if it’s your first time.
What are the eligibility criteria?
Firstly, your company or business should have a registration in Singapore. Secondly, it should have been in existence for at least a year. Thirdly, it should have a turnover of at least 60,000 SGD.
What documents are required?
Some documents you must submit include recent financial statements, invoices, six months bank statements, latest utility bills, information reports, and income tax assessment notices.
You might also be required to provide a list of assets owned by your company and a tenancy agreement.
How much interest do companies charge for taking business loans?
The micro-loan interest rates depend on the company’s SME profile and credit analysis. You will even find companies that offer attractive rates varying from 5% to 15% per month.
Is there a limit on the loan amount?
The exact amount will depend on factors like your legal requirements, but it will usually range from 10,000 SGD to 200,000 SGD.
What happens if you can’t repay?
You should always ensure you repay the loan, regardless of whether your business venture fails or succeeds. However, failure to do so will force the lenders to collect the payment by sending you a letter of demand, visiting your house to deliver the letter, and even taking legal action against you.
The maximum period for the repayment is 24 months or two years.
Things lenders consider before approval
Licensed lending companies will consider a borrower’s financial situation and if they meet the minimum requirements. However, those are pretty reasonable and much more so than banks demand.
They will also consider your current business revenue and expenses and if the borrower would fulfill the loan requirements.
Things to check before borrowing money
You should borrow money only from licensed moneylenders mentioned in the list released by the Registry of Singapore. Licensed professionals will approach you only through consumer directories, official websites, and advertisements inside or outside the company’s premises.
Borrowing money from licensed lenders like A1 Credit carries many advantages, from less processing time to a flexible repayment system. It ensures you get the funds required for your business-related requirements.