Wednesday, July 17, 2024

Find Out What You Should Know About Small Business Start Up Loans in Singapore

Businesses, particularly start-ups, may think about borrowing money to stay afloat and expand their operations until they start making a profit. Depending on the industry in which your business operates, you may require more funding than you can raise from family and friends to get started.

One of the several options available to a start-up business to meet its working capital requirement is borrowing money. Small business start-up loans are one way to get the money you need if your business needs a significant initial investment, like equipment or inventory.

Funding for start-ups covers the costs for business permits, incorporation, insurance, marketing collateral, machinery, facilities, and hiring the required personnel. A start-up business loan also provides funding for manufacturing products, distribution, and marketing. Many countries, like Singapore, help SMEs with funding options ranging from government grants to start-up business loans and temporary bridging loans. Small business start-up loans are prominent among them.

Get to Know What Is Small Business Start-Up Loans

A small business starter loan is a smaller version of the typical business loan with a cap of SG$ 100,000. A typical business loan can be very expensive for a startup. This kind of small business loan offers small, micro, or startup businesses a loan amount of a minimum of SG $100,000 and a maximum of SG $ 500,000 at lower interest rates to make a successful start. With this funding, your startup will have sufficient working capital to carry out its daily operations.

Microbusiness owners find startup-oriented loans very helpful for they are available at competitive interest rates and flexible payment terms. Moreover, you can easily qualify for this loan, for there is no need for a lengthy financial history and period of being in business.

Why Do SMEs Prefer Start-Up Business Loans?

Small business owners choose startup business loans for they are:

  1. Collateral-free

A typical business loan is offered collateral-free by most banks and financial institutions. SMEs find this as a major benefit during the initial phase of the business operation.

  1. Good enough to improve cash flow

You have to make sure that your business is profitable enough to cover costs for loan instalments, utilities, salaries, and maintenance. After paying off your debts, you may reach the breakeven point, wherein you may undergo a brief period of erratic cash flow.

With a business startup loan at a flexible repayment period and competitive interest rate, you can maintain your company’s cash flow in this situation. This loan can serve as a safety net in case you run into unanticipated logistical hiccups or utility costs that may disturb your regular business operations.

  1. Expand your business

Taking advantage of opportunities is crucial for any SME business and cash-strapped companies find it challenging. Business starter loans help you make prompt investments that eventually result in the expansion of your business. You receive enough money from an SME microloan to manage and survive in a competitive market.

  1. Invest in equipment and inventory

By investing in new equipment or machinery that guarantees better performance and longevity, you can develop your small business. A startup business loan can offer you the required funding for the latest equipment, extra technical staff, and vehicles.

If your business operation necessitates the use of additional machinery that is hard to fit in your current facility, you may have to lease a business property. Here, a startup loan can help you with the upfront costs.

How to Apply for a Start-Up Business Loan?

  • Submit your business loan application: You can apply for the loan through ‘MyInfo Business’ or ACRA, for it helps the lending bank retrieve the necessary financial documents of your business. The Accounting and Corporate Regulatory Authority or ACRA is a statutory board of the Singapore government, which controls business entities, corporate service providers, and public accountants.

You may have to give some additional documents like the latest financial statements of your business and bank statements for the last three months.

  • Inform your guarantors: You need guarantors with minimum income as required by the lending bank and they should be of age between 21 years and 62 years. One of the guarantors should be a Singapore permanent resident. They have to endorse your startup business loan application.
  • Submit and track your application: You need to send your completed application with the essential documents for approval online. For instance, DBS Bank allows you to track the status of your loan application form on its business banking app DBS IDEAL easily.
  • Receive and review the offer: You will receive a business loan offer if your application is approved. You can accept the offer after reviewing it.
  • Wait for the notification: Once the loan is disbursed, you will receive a notification from the bank.

Eligibility Criteria for a Start-Up Loan

  • Your SME business should be registered in Singapore and operating for at least 6 months or more
  • It has a minimum of 30 percent shares owned by a Singapore resident or Singaporean.
  • Your business should have a yearly turnover of less than SGD 1 million and a staff size of 10 or fewer.
  • You need guarantors, of which one of them is a Singapore resident or Singaporean.

Your small business in Singapore now has quick access to funds to meet its everyday operating expenses through small business startup loans. You need to have your business plan showing how your business will succeed ready, complete the business loan application, and show how you will repay the loan when applying for the loan.

Lindsey Ertz
Lindsey Ertz
Lindsey, a curious soul from NY, is a technical, business writer, and journalist. Her passion lies in crafting well-researched, data-driven content that delivers authentic information to global audiences, fostering curiosity and inspiration.

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