All About Loan In Singapore
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Singapore Business Loan Tips – How To Get One Part 1

There are some crucial financial figures that lenders use to assess whether your business will be able to get a Singapore business loan.

The truth is that most figures that lenders look for are the same whether you are looking for a big or small business loan. How your company appear after tabulating all the required figures can also determine the commercial loan rates for your Singapore business loan.

Here are some of the figures that will determine whether finance companies can offer you a Singapore business loan when you apply for a business loan.  Note that secured business loans will give you lower business loan rates than business bank loans that are unsecured.

Now let’s move on to information that will help you on how to get a business loan.

Sales revenue

The first figure that you have to note of, is your company sales figure. To get a Singapore business loan, your sales figure is very important as it shows how well you are servicing your market. This figure can help lenders who are assessing whether to give you a commercial business loan to determine if your company will be able to service short term business loans at the prevailing commercial loan interest rates. Your company sales can determine the quantum that can be offered to you as a Singapore business loan. This is so even if you are applying for a Singapore business loan in terms of equipment leasing or asset based lending programmes.

Loans in Singapore for businesses to borrow money also include business overdrafts and even a simple small unsecured line of credit with business loan rates comparable to car loan interest rates.

Do note that banks and financial institutions do know what they are doing when assessing for a business working capital loan. They are aware that generally certain businesses have higher turnover and certain businesses have higher profit margins on business opportunities in Singapore.

So generally, if you are looking for a high quantum of Singapore business loan, a high revenue figure will greatly help you get a loan in Singapore.

Net profit

The second important figure in your application for a business bank loan will be your net profit value. Even a newly established business applying for a small business start up loan has to indicate it’s projected profit margin. Although it may be different when applying for a business property loan, businesses has to have a healthy profit margin for banks to be comfortable enough to offer them a Singapore business short term loan for their working capital requirements. This shows the ability of your business to service the business loans offered to you. These are very valid business loan requirements being assessed on your business loan application.

If for example, your company is expected to make $50,000 in profits but only managed half of that in the latest financial year, the business loan lenders may question if your company will be able to service the loans in Singapore or whether the management is running the company efficiently.

If your company is actually running in the red when you apply for a Singapore business loan, do check if your company has a positive net worth by applying your losses into your paid-up capital. Business capital loans may be more appropriate depending on your company situation.

If your company is making little profit or losses, lucky for you, you have read this before applying for a Singapore business loan. Since what you are applying for are not personal loans, important points to note include that of depreciation and amortization can be added back into the Net Profit to boost it. As depreciation and amortization are non-cash expenses, they should be added back to the Net Profit for the third party Singapore business loan lenders to consider.

The Directors’ income tax statements (NOA) can also be taken into account. Unlike personal loans, part of the expenses of the company is used to pay the Directors in salaries and Directors’ fees. Since Directors will most likely be asked to provide a personal guarantee for Singapore business loans, their income should also be taken into consideration. Although you are not applying for a business property loan, it would help you get a loan if the Directors own fully paid up (unencumbered) properties as it is a reflection of their personal net worth. It will be even better if you are able to prove that one of the guarantors are cash rich. There may be varying business loan terms.

In some scenarios, third party guarantors can come into the picture when you try to get a Singapore business loan. Just remember that you are not applying for bridging loans, and common sense tells us that if a third party guarantor does indeed come in for bank loans, make sure you select one with high net worth, high cash money in the bank or declared income. The best business loans can be offered when all guarantors are perceived as “safe” borrowers.

End of part 1. Part 2 of this article scheduled for publication on 26 October 2011.