Business finance searches are more fruitful when you know what’s out there

Business finance searches is important to grow and expand your company, but if you are not totally prepared for scrutiny, you may never get the credit which you so badly needs. 

By: Hitesh Khan/

Whether your business is just starting up or preparing for expansion, credit can help support your short and long term financial goals. You will find there are a number of benefits to having business credit, but before you apply, it’s important to determine whether your business is ready for credit.

Follow these tips to ensure your business finance searches lead to you laying your hands of that much needed funds:

1. Review your credit history before business finance searches

Lenders will thoroughly examine both your personal and business credit history before making a credit decision. Before you approach a potential lender, request a copy of your personal credit report. If you find errors in your credit report, contact the credit bureau.

2. Gather financial documents before business finance searches

You will likely need tax returns and financial statements for your business if you are applying for a term loan or line of credit. For a Small Business Administration loan, you may also need to present a formal business plan.

3. Determine how much capital your business needs before doing business finance searches

Before you walk into the lending office or fill out a credit application form, figure out exactly how much money your business needs to borrow, and make sure it’s a realistic amount. If you’re not sure how much capital to ask for, consider consulting a financial professional. He or she will closely examine your cash flow and current debt load to determine how much financing you actually need. Also, be prepared to tell the lender how you plan to use the money.

For example, you may explain that you will use the capital to pay for additional office space, furniture or equipment.

4. Understand all your lending options before business finance searches

It’s important to identify all the lending options available to you and determine which one is the best choice for your business. You will also want to consider the process and the timing. For example, loan decisions below $100,000 may be based on your credit profile and basic information, while larger amounts may require a detailed review of your finances.

5. Consider payment terms while doing business finance searches

You also have to decide how long you will need to repay your credit. There are short-, medium-, and long-term loans, and they all have positives and negatives. For example, if you expect to be able to pay back the money quickly, a short-term loan may be the best choice.

While preparing to apply for credit, you’ll need to gather key information and required business documents to support your application. The requirements will vary greatly depending on the type and amount of credit, from basic information for a credit card to full financials for a major term loan.

For more complex loans, you may need to provide additional information. For example, in the case of a commercial real estate loan you will need to provide some property related documentation.

	What: Business and personal information   Why: You’ll need to have all relevant names, dates, and numbers handy to complete an application — including bank account numbers and balances for business and personal accounts, as well as annual revenues for the business.
	What: Business entity paperwork and permits   Why: Whether your business is a limited partnership, private limited company, or some other type of entity, you may need to include the entity documents, as well as any important licenses or permits.
	What: Business financials   Why: Your balance sheet provides information on your assets and liabilities at a point in time, while your cash flow statement provides a critical metric for a lender in terms of your cash flow over time. If your finances aren’t well organised and you find it difficult to generate this information, then it may be a good time to re-examine your accounting practices.
	What: Personal income statement   Why: Even for a well-established business, the owner’s personal finances still play an important role. Your 2-year income tax statements, and a statement of your annual household income reassures the lender that personal financial needs aren’t likely to affect the business, and conversely, that you could help support it with your own resources if necessary.
	What: Tax returns   Why: For larger loans, you’ll need to provide both personal and business tax returns for the last two years. This record is important to ensure the business has the income claimed and the ability to service all debt, including the new financing.

To present a strong credit application while doing business finance searches you should engage a loan specialist to help you avoid common application mistakes.

New businesses fail within a short period of starting and one of the main reasons why they do so is because they do not have access to credit or SME loan. There were 43,000 start-ups here in 2016, almost double the 22,000 in 2003, and according to the Department of Statistics, half of new businesses fail within the first three years.

Limited help is available to struggling entrepreneurs and enterprises from Enterprise Singapore, a statutory board under the Ministry of Trade and Industry (MTI). It was formed on 1 April 2018 to support Singapore SMEs development, upgrade capabilities, innovate, transform, and internationalise. It also supports the growth of Singapore as a trading and startup hub, and continues to be the national standards and accreditation body.