In this portion, we will address the things you need to do before you apply for a business loan in Singapore. Also, we will approach what some important documents and types of institution that gives the business loan are.
What are the things you need to do before you apply for a business loan in Singapore?
If you have a business in Singapore, then you will know that there are certain things you need to look for. These are important things as these things will help you get your business loan quicker and faster. A business loan is a thing that any business that is from a small to medium business can take from anywhere. The only thing advisable is that you should take any kind of loan from a reputable place. You must always take it from a place that is being used and recommended by people and has good reviews. There are certain reasons as to why a business might need a loan, and, in most cases, it is because of finance. Moreover, if they have a financial shortage, then they will take a business loan. There are not many businesses in the world that have sufficient money in the beginning. This is the reason why most of them take a business loan so that they can grow more in the market with that money. There are things like working capital loans, SME loans, invoice factoring, and many more. These were just some of the business loans that you can take from the market. Given below is the list of things you need to do before taking a business loan from anywhere.
- Understand the purpose of the loan
The first step will be that the business should understand for which purpose do they need a loan. This is because any bank, moneylenders, or financial institution they go to will ask them the same question first. The reason can be for anything like buying tools and equipment, machinery, purchasing new space, etc.
- Know what is the cost of a business loan
Before you apply for a loan anywhere, you should calculate the cost for it yourself. You will need to check the amount you need and divide it by the term you can get. You will get the amount of monthly EMI that you need to pay and check if you can afford it.
- Work out the loan amount
It is imperative that you always calculate the loan amount that you want. Then only you should decide if you want to take that loan or not.
- Calculate the capacity for collateral
When you are taking any kind of loan, you will need to keep collateral with them. This means that you need to keep something up so that if you are unable to pay, they will take the collateral.
- Research all the borrowing options
You should check out the different places from where you can take a loan from. Then you have to compare them all and then select the one that you want to use.
- Understand the interest and charges
In a loan policy, there is always interest and different charges that you need to pay the lender. This is why you need to research all of them in advance and be prepared.
- Prepare your documents
If you are applying for a business loan Singapore or anywhere else, you will need all financial documents. You will need everything from the company’s earning to what they spend every day.
- Calculate what you can afford to pay
You should always take that loan policy which you can easily repay back to the bank in determining installments. You should also calculate the EMI in advance to check if you can afford it or not and then only take a loan.
What are the documents needed while taking a loan?
Given below is the list of documents that are needed while you are taking a loan.
- ACRA business profile information
The first thing is that the bank of any institution will demand your company’s financial documents. They will check how much money you are making, spending, and are saving for later, then decide about the loan.
- Notice of assessment of all directors from last two years
They need to take notice from the directors of the company about the last two years’ income. This will help determine if they are eligible for the business loan or not.
- Latest CBS report
This is the report that contains everything that is the previous loans taken by the company. It also contains the current credit rating of the company, which is needed a lot.
- Six months bank statement
The lender will need to check how much money they have received and how much they have spent in 6 months.