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Keep Your Business Growing With These Financing Options

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Jeff Cuellar

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It doesn’t matter whether you’re a young entrepreneur or a veteran business owner seeking expansion, new equipment, or survival through a rough sales period – one of the toughest obstacles you’ll face is getting the capital you need to secure your company’s future.

Unfortunately, finding the funds you need to finance your business plans isn’t as easy as it once was. In fact, you might need to consider some alternative sources of funding to keep your business going.

Here are some loan and credit financing options to consider:

 

Financing Your Business with Loans

 

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If your current office makes business expansion… problematic, consider applying for a loan to purchase a bigger (and hopefully better ventilated) office.

 

If you need cash to pay for new equipment, business renovations, vehicles, real estate, or you just need working capital – financing your business with a loan will give you the funding you’re looking for.  With a business loan, you can add much needed capital to your company in as little as 2 days, depending on how fast you’re approved.

Fortunately, you’ve got many loan options to choose from including government launched business loan programs (SPRING’s Micro Loan Programme and Local Enterprise Financing Scheme) and even personal loans.

This table illustrates several loan options to consider:

Loan Type

General Eligibility Requirements

Loan Amount

Loan Tenure

Interest Rate

SPRING Singapore Micro Loan Programme (MLP)
  • Singapore registered company
  • At least 30% local ownership (Citizen/PR)
  • Must have less than 10 employees or your minimum annual turnover must be less than $1,000,000
Up to $100,000 4 Years 5.50%+
Micro Loan (Banks/Private Lenders)
  • Singapore Citizen/PR
  • May have income requirement (for startup entrepreneurs)
$500-$50,000 Up to 10 Years Varies by the level of “risk” determined by the banks
Business Loan
  • Singapore registered company
  • 30%-50% local ownership (Citizen/PR)
  • Business must be in operation for at least 2-3 years (varies)
  • May need to provide collateral
  • Minimum annual turnover of at least $300,000 (varies)
$300,000-$500,000 4-5 Years Varies by the level of “risk” determined by the banks
Personal Loan
  • Singapore Citizen/PR/Foreigner
  • Age 21-65 years old
  • Must earn the minimum income established by the banks (varies)
$3,000-$30,000 5-7 Years Varies but can easily rise above 17.5%
SPRING Singapore Local Enterprise Finance Scheme (LEFS)
  • Singapore registered company
  • At least 30% local ownership (Citizen/PR)
  • Must have less than 200 employees or your minimum annual turnover must be less than $100,000,000
  • Can only purchase JTC Corporation or HDB properties if funds are used for real estate
Up to $15,000,000 4-8 Years 4.25%+

When choosing a loan option, keep in mind that personal and business loans require good credit standing and possibly collateral. But if you need a small amount of capital urgently and don’t have an established credit history, consider taking a micro loan, which offers greater borrowing flexibility for your mid- or long-term financing needs.

You can save yourself time and find the best loan package for your business by checking out Smartloans.sg.

Important Note: If you run an SME with 30% local shareholding, have less than 200 employees and your annual sales are less than $100 million (domestic), $300 million (non-trading company with overseas facilities), or $500 million (trading company with overseas facilities) you can insure your loans from default with the Loan Insurance Scheme (LIS). To find out more or apply, you can go here.

 

Financing Your Business with Credit

 

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If your office equipment desperately needs an update, using credit can help you get it quickly (just don’t get too carried away with your spending!).

 

Another option to consider when financing your business is to utilize credit. Banks offer several sources of credit including credit cards (personal/business) and personal lines of credit. Funding your business through credit has several advantages such as being able to get cash faster than loans and faster accrual of rewards points.

But you’ll need to be very careful with using credit, as borrowing too much to make your minimum payments can put your business into the grave faster than a bad sales period will. Also, credit cards tend to have higher interest rates than loans. So if you’re looking to inject smaller amounts of capital into your business for short-term goals (buying new equipment/working capital), consider credit.

This table illustrates several credit options to choose from:

Credit Type

General Eligibility Requirements

Credit Limit

Interest Rate

Personal Credit Card
  • Singapore Citizen/PR/Foreigner
  • Age 21 and above
  • Must earn the minimum income established by the banks (varies)
Varies from 2X-4X your monthly income (varies) Varies but typically around 24%
Personal Line of Credit
  • Singapore Citizen/PR/Foreigner
  • Age 21 and above
  • Must earn the minimum income established by the banks (varies)
Varies from 2X-4X your monthly income (varies) Varies from 11%-18% depending on whether you’re a bank’s customer or not
Business Line of Credit
  • Singapore Citizen/PR/Foreigner
  • Age 21 and above
  • Must be a business owner
  • Business must be financially healthy
  • Business must have majority local ownership (Citizen/PR)
  • Business must be in operation for at least 1-3 years (varies)
  • Must earn the minimum income established by the banks (varies)
Varies from 2X-4X your monthly income (varies) Varies but is routinely 20%-25%

Credit cards and lines of credit are similar, but not necessarily the same. They typically involve revolving credit, have set limits, and allow you to reuse “credit” after you’ve made your payments. The main differences between the two is that credit cards don’t need to be issued from a bank, are easier to get with less established credit, and tend to have slightly higher interest rates than lines of credit.

In general, credit should only be used if you need a short-term influx of capital and should be paid back as soon as possible. Otherwise, you risk saddling yourself with a debt that will cost you dearly in monthly interest if you carry too large a balance over time.

To compare and find the right credit card for your business needs, check out MoneySmart.

 

Know of any good loans or credit options business owners should consider (or not)? Share your experience with us on Facebook!

Image Credits:
pekexoxitl, Towey, cvrcak1

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Jeff Cuellar

I'm known by many titles: copywriter, published author, literary connoisseur, ex- U.S. Army intelligence analyst, and Champion of Capua.