Things You Want & Need to Know Before Taking Up a SME Business Loan

Cashflow is the lifeline of any type of business.

Seasoned entrepreneurs are aware that while turnover and earnings matter a lot, it is cashflow that will swiftly determine the success or failure of the company.

That is why small and medium-sized business loan is always an evergreen issue for all companies.

With less negotiating power, SME business owners usually need to pay for services or products from vendors, and are generally the last when it comes to repayments by customers.

This gap in payments in particular sectors can be up to several months, such as in the construction industry.

When unanticipated situations struck, such as late settlements by clients or budget overruns, small businesses without appropriate funding can be left completely dry and high.

With a lot at risk, SMEs have to ask themselves “Are my present funding centers sufficient for my company requirements as well as future growth?

Having said so, start-ups that are less than 3 years in operations are usually not within the banks’ risk appetite. Those younger SMEs often have to go for higher interest non-bank insituations that can eat right into their earnings.

Even SMEs that are more than 3 years of ages  are still required to keep a good credit reating before any banks or financial institutions are willingly to provide reasonably priced unsecured SME loan to them.

With a variety of government-assisted schemes in Singapore, they offer to ease some funding troubles for Singapore SMEs.

Some examples of such schemes are ocal Enterprise Finance Scheme (LEFS) are  SME Equipment Loan.

SME Equipment Loan supports equipment financing for companies with higher risk profiles.

SME Micro Loan

SME Micro loan offers working capital loan for micro-enterprises.  For young micro-enterprises much less than 3 years old, they can take advantage of on SME Enhanced Micro Loan for low cost working capital financing.

Where to get your SME business loan?

Banks are still the most first go-to avenue for SMEs due to the fact that banks are able to offer the most competitive business loan interest rates to SMEs that qualify – those which are at least have been in business for three years and a minimum turnover of $500,00 to $750,000.

In addition to banks, smaller financial institutions are the next port of call for SMEs seeking financings.

Regardless of the loan option you choose, taking up a loan for your business is not a decision to be taken lightly. Always do your research & decide carefully if taking up a business loan is really necessary and if it will put any unnecessarily strain on your business financials.