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Can I Get A Loan To Start A Business

Can I Get A Loan To Start A Business – Business: 5 Reasons Why SMEs in Singapore Should Consider a Business Loan The best time to get a loan is when you don’t need it.

This article was written in collaboration with OCBC Business Banking. All opinions expressed in this article are independent opinions based on our own research. cannot be held responsible for any financial loss that may result from any action and readers are advised to act at their own discretion. You can view our editorial policy here.

Can I Get A Loan To Start A Business

Small businesses are the lifeblood of many domestic economies. This is no different in Singapore, as SMEs account for 99% of all jobs and employ 70% of the country’s workforce. However, statistics show that non-SMEs account for about 57% of Singapore’s GDP and the remaining 1%.

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However, we can understand that every successful business starts with humility. Most MNCs started at some point in time. In fact, Trade and Industry Minister Chan Chun Sing then encouraged local SMEs with big growth ambitions to call themselves “Emerging Singaporean MNEs”.

You must actively invest your resources, including your time and money, to grow your business. However, operating cash flow may not be sufficient to support your expansion plans or hinder your rapid growth. With that in mind, fundraising is a viable option for improving your business operations.

Although getting a small and medium business loan can seem unfamiliar and intimidating, here are 5 reasons why entrepreneurs should consider getting a loan.

Most TV viewers are familiar with the TV series Shark Tank. Attracting capital from investors is one of the ways to finance development programs. However, as you can see on the show, you may have to give up some of the company’s profits in exchange for funding, especially if you don’t have a problem with your negotiations (e.g. multiple investors competing for investment). do). your company).

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Raising capital from investors means bringing shareholders and possibly new directors to the board to manage and manage. This has both advantages and disadvantages.

Investing is not like a loan, you don’t have to pay interest on the money you save. However, that doesn’t mean there isn’t pressure. In fact, you’ll have new and existing shareholders holding you accountable for how you spend the funds raised. They need to believe that you are using the financing to grow your business, as this will affect the value of their stake in your business.

By taking out a loan (for example, an SME business loan), your operating liabilities increase. However, there is no change in the share structure of your business and the share of the company you own. Of course, you are obligated to repay the interest component and the principal component for this interest.

When your business is booming, you want to strike while the iron is hot. This means two things: a) building momentum rather than decelerating/slowing down and b) moving quickly when creating business opportunities. This often requires large investments in equipment, real estate, and/or personnel, or spending cash to purchase inventory or raw materials at discounted prices.

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Getting a business loan from a bank can be one of the fastest ways to raise money. For example, OCBC claims that a business loan application can be made in less than 5 minutes via MyInfo or MyInfo Business and the loan amount can be approved in 1 business day.

Likewise, you can identify business assets that will contribute to your expansion plan or are part of your plan to relocate your business. Regardless of the reason, it will be an expensive undertaking. A commercial real estate loan can finance up to 80% of the cost of purchasing or appraising the property. Loan approval can take up to 72 hours.

There are times when you consider putting your personal savings into a business. One reason for this, as mentioned above, is when you see job opportunities. Another reason is that during a recession like the recent 2020 recession, COVID-19 can simultaneously dry up business and cash flow.

If you put your personal savings into a business, you risk destroying an important financial safety net for you and your family. First, you may not have enough money to cover a personal emergency, such as the health of a family member or a disaster. In such a scenario, you need to save to cover the cost of treatment and loss of income for a period of time.

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More than 43,000 businesses closed in 2020. No one likes to see their business fail, but unfortunately it does. If this happens, you can access your personal savings to support you and your family until the next opportunity.

With a business loan, you can ride the wave of expansion or navigate the uncertainty of recession without confusing your personal finances with your business finances. Of course, it should be noted that many payday loans may require a personal guarantee from the company’s shareholders to secure the loan.

Upgrading and/or repairing major equipment ensures that it is operating at optimum efficiency. Of course, purchasing new equipment can improve efficiency or be part of expansion plans.

Such expenses are usually capital intensive and can strain your business’s cash flow. Fortunately, you can finance equipment and supplies to buy new equipment. You can rely on a government loan for small and medium business capital for your day-to-day operations, which may include maintaining existing equipment or having enough cash flow to pay rent, supplies, and payroll.

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There are also several specialized loan options for specific industries that you can use to build your business. For example, OCBC provides financing for healthcare operations, including renovations, general working capital and financing for medipreneurs opening their own clinics.

Of course, you can choose to deposit your cash flow into your business bank accounts. However, this adds unnecessary cash flow risk to your business. For example, a slowdown in your business may cause you to be unable to pay wages and short-term obligations. This can cause your work to become dusty.

You can use business finance solutions for short-term capital requirements. This can include an advance payment to the supplier if you do not pay your customers in full (with invoice finance) or if you require longer payment terms (with invoice finance).

Ironically, the best time to get a business loan is when you don’t need it. Because you’ll be in a better financial position knowing that you can pay your loan on time every month. This will create a good track record for your credit.

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Even if you don’t want to expand aggressively or need a business loan, you can start small. If this is not your experience, the conditions may be less than ideal.

If you need a loan in the future, there will be no unnecessary delay. Because you are already familiar with the loan process. In addition, the bank will have more confidence in your ability to repay the loan because your company has a history of repaying your loans.

A borrower with good credit can also be charged a low interest rate. This is important if you need a quick loan and don’t have time to shop.

For a growing business, borrowing to expand may seem unnecessary. However, seeing competitors lose market share or stagnate can be a huge threat to your business. Also, taking on too much debt can easily overwhelm and strain your business.

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As a business owner, you have the responsibility to determine the direction of your SME. Growth requires investment. However, many businesses do not have the internal financial resources to finance their expansion needs. So taking a loan can be a great solution.

Business loans come in many shapes and forms, and as mentioned, the government supports many of them. You can check out OCBC’s comprehensive loan offerings to find out what types of loans OCBC needs and how they can help your business succeed.

Get instant funds and instant loan approval status when you apply online through OCBC.

Protect up to US$100,000 with OCBC for SMEs that have been in business for just six months.

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