Effective Ways to Increase Your Chances of Securing A Small Business Loan

A small business loan is one of the easiest and convenient way to finance your business. May it be financing for expanding, procuring equipment or purchasing inventory. This can give you the means to achieve your business goal, at once.
Securing that loan may seem a daunting task to accomplish, but in reality, all it takes is the right knowledge and strategy. Making the adequate planning and preparation before taking action can make all the difference.
Small Business Loan

Where To Apply For Small Business Loan?

For smaller loan amounts, borrowing from money lenders can be a great option. It is easier and faster to secure than going through the bank.
Moneylenders in Singapore are licensed by the Registry of Moneylenders, on which they are required to abide by the Moneylenders Act and Rules. This ensures that the Registry regulates fees, lending amounts limit, and interest rates.
They are in some ways very similar to banks, in granting loans to select small businesses that have substantial financial needs. Legal or licensed money lender does not harass borrowers when their payments are late. They use the similar legal methods banks used with these issues, like sending notifications or reminders.
The only difference in borrowing from moneylenders instead of banks:

  • Loan Amount

Unlike in banks, moneylenders are providing their services for small business owners who are in need of a considerable small amount to finance their business.

  • Faster Processing

They take less time to process. Loan applications are at times prepared and approved within the same day if you have complete proper documents on hand. This is due entirely because they conduct fewer background checks and complications.

  • Easier Approval

Even with a poor credit rating, moneylenders can still grant you with a loan, only with lesser amount compared to other circumstances. They can give a chance to anyone, as long as you prove that you are capable of repaying the amount.

  • Rates

Money lenders mostly offer higher prices compared to banks. This is the only drawback it seems. But depending on your needs, the small business loan from moneylender can still be an excellent option for you. 

Planning and Preparation

Sufficient planning and preparation can give you the much-needed boost on your chances of securing a small business loan. Staying ahead of your business is as essential as staying ahead of your finances.
Anticipate some delays in the processing of your small business loan. If you have an urgent need of the fund, you are not in good condition to make an intelligent decision. There is no good in rushing into a commitment that you are not ready for.

  1. Take Stock Of Your Business

Look into your business plan. What does your business might need regarding resources and finances in the future? You need to establish your goals and strategies on how are you going to utilize the new fund for your business.
Examine the state of your business. Create a strategy based on financial projections that are well thought-out and logical. Work to demonstrate your credibility to your lender. Show them how sincere you are with your application.
Analyze your cash flow and determine how many loans do you need and how are you going to pay for it. List all the issues and problems with your business.
Include preparations for emergency or worst-case scenarios with your budget. Establish a backup plan on how you are going to sustain your payments when your primary source is diminishing.

  1. Update Your Finances

Prepare to present your balance sheets and income statements for the last couple of months, up to the year. This will show that you have enough resource and capability to pay for new loans in addition to existing ones if you have any.
Make sure that the payments on your existing loans and other expenses are up-to-date. It will help a lot if you have a good credit score. Most of the time, both business and personal credit records are scrutinized.
Money lenders need to ascertain if you are trustworthy and reliable. You need to be in your best shape to secure a new loan for your small business. It is true that you are in need of cash assistance, but you also need to be highly-capable of paying it back.

  1. Prepare All Documents And Requirements

Planning and completing all, if not some of the requirements can help ease and speed up your loan application process.
Some of these documents listed might come in handy for your loan application:

  1. ACRA Business Profile
  2. Profit and Loss Statement
  3. Business Bank Statements
  4. ACRA Income Tax Reporting Summary
  5. Proof of Income Funds
  6. Tenancy Agreement for Place of Business
  7. Title Deeds or other Proof of Assets

Taking Action

Now that you are fully prepared, it is time to start your loan application. There are ways you can increase your chances of securing your small business loan during the application process.
You should learn how to make the calculated moves you can make to tip the scales in your favor.

  1. Start Your Application In Advance

Take the proactive path and start your application ahead of time and not right when you need it. This will give you enough time to make sure that you find the best deal.
The loan application can take some time, depending on your preparation. You need to prepare your requirements and use before the need for the fund arises. You also need to spend more time in shopping for offers that will suit your needs.
Having a deadline hanging over your head will only push you in the wrong direction. Your impulsiveness can just do more harm than good for your business.

  1. Choose A Moneylender

The most important thing is you conduct your business with a licensed money lender. This will ensure that all your transactions are legal and that the law will protect your rights.
You can always check online if they have a license and also read some of the reviews from their customers. It is your responsibility to get to know them as well as they did for you. Trust goes both ways, especially when conducting business.

  1. Get Acquainted

Setup an appointment with your potential creditor. Facilitate a tour of your business to show how well you’re doing. This is also the chance to demonstrate how you can be transparent with your procedures.
Cover all the bases, both good and bad. Tell them about your business issues and problems and how you plan to take care of them. They might appreciate your honesty more than you realize.

  1. Prepare A Backup Plan

You need to have a backup plan. When all else fails, you have to be prepared to have a backup source to pay for your loan. This will help show money lenders how confident you are in repaying them.
This way you can guarantee them that you have the capacity and intent to meet your payments, no matter what happens. This would be a better time to have some savings put away, just in case.

conclusion

In conclusion, devoting enough time to plan and prepare before proceeding to your loan application can significantly increase your chances of securing a small business loan.
If in case you get denied with your application, many other licensed moneylenders in Singapore can help you. Just stick with your plan and give it enough time.

How to Qualify For a Small Business Loan?

In these tough economic times, it gets more difficult to finance your business with your own funds, that’s why more consumers choose to apply for a business loan. For individuals looking to open small businesses, there will still be a requirement of loan using which you have to purchase things, apply for manpower and other resources for your company.
Regardless of a small or large business, every businessman needs capital. And most capital these days comes through loan applications. Taking a loan to open your own small business is not a daunting or challenging task. However, there are some qualifications that are needed from small business owners for them to apply for a loan in a hassle-free way.
Small Business Loan
In order to qualify for a small business loan, the following are basic yet important prerequisites that can help with your loan application.

Build your credit score

Before considering bank loans and collateral loans, you can try doing wonders with your credit score itself. This will keep you off the debt and loan tracks. Credit score evaluates your eligibility to repay your personal debts such as credit cards, mortgages, and car loans. And if you are about to start your own small business, you will have to possess some form of credit credibility that can encourage lenders and third-parties to loan you money. In simpler words, a good credit score shows that you are more than efficient and punctual in repaying your debts off the market. Therefore, a high credit score will definitely be the first stepping stones towards establishing your business.

Remember that loans help banks to make money

It’s not worth to afraid to apply for a loan if you really need it. If banks will stop lending, then they will stop making money. But it’s important to choose a bank familiar with your industry, there you will get more chances to get approved. Look up for banks, which specialize in small business financing. Also, it’s important to visit several banks and talk to their officers about what kind of loan products they provide and compare offered terms and conditions. Seek the best interest rates, consider repayment time periods and repayment options that can help you benefit more instead of the bank.

Get ready to answer the questions

The most important task you have is to assure the loan officer that the bank takes low-risk lending you money, so it’s important to prove that you’re a reliable and responsible borrower. So you should be prepared to answer different questions about how much money you’d like to borrow, how long it will take you to repay and etc. The condition of your personal and business credit is one of the most important factors the loan officer pays attention to, also it’s important to assure him/her about your ability to repay the loan and provide all the necessary documents, which will allow making a positive conclusion.

Keep all the documents in order

Take your time and get all the documentation in order, because there will be a need to provide it to a loan officer. It’s important to remember that documents shouldn’t be handwritten because it looks unprofessionally, that’s why it’s important to type them. Keep in mind that you will not have a chance to make a first impression twice, that’s why it’s necessary to dress professionally and get ready for the interview. Your loan application shouldn’t contain false information, the lender can check it. Do your best to make an impression of a trustworthy and professional businessman. Such legal documents include:

  • Personal and business income tax returns
  • Balance sheet and income statement
  • Personal and business bank statements
  • A photo of your driver’s license
  • Commercial Leases
  • Business licenses
  • Articles of incorporation
  • A resume that shows relevant management or business experience
  • Financial projections if you have a limited operating history

Develop a strong business plan

When you actually take your business plan to get loans approved by various lenders, make sure that the plan that you have is concrete. You need to have a strong business plan without fail, in order to encourage lenders to loan you the required amount of money. If the lenders are not quite impressed with either your business idea or the returns that they can expect, they can outrightly reject your loan application.
Ideally, your business plan should include a description of the company, products and services offered by your business, details of the management team, industry analysis, promotional, marketing, and sales strategy, SWOT analysis (strengths, weaknesses, opportunities, threats), and more.

Conclusion

You can always opt for unsecured business loans, in case you don’t have adequate assets or enough collateral to apply for the same. However, legal parties and lenders are a reliable option any day, due to the convenience, comfort, and minimum qualifications required to apply for and acquire a small business loan.