Ravi Chandran
In any country, small and medium enterprises employs the most people, yet these are the most underfunded businesses, struggling financially
Underfunded businesses without the right infrastructure or guidance can be set back by up to $150,000
The success and failure of a business is often the availability or lack of funding. Small businesses often do not have money to employ a Chief Financial Officer or a financial controller or someone who would help them to assess funding needs as hiring these people could easily set them back between S$80,000 to S$150,000 per annum at the least.
Most businesses have an accounting function to handle operational matters but not funding and strategic financial matters. This is a gap that differentiates a small and medium business with that of larger successful businesses.
Hence many small businesses continue to suffer on several fronts.
- Missed opportunities due to lack of funding.
- Unaware of government grants or funding.
- Higher funding costs.
- Unhealthy Cash Flow and quick ratios.
- Lack of strategic financial planning.
Underfunded businesses should partner SME loan consultants are here to be your long term business partners for business growth for the next 3 to 5 years.
Risks of Bank Loan Application Being Rejected
Many businesses may not dedicate enough time to finance and accounting. Their financial statements are also not in proper order, or do not give the bank a fuller picture of the financial health of the company.
Failure to get a loan in one bank can be potentially detrimental for your future loan applications at other banks.
What is the good, tried and tested SME loan process?
Trustworthy loan consultants follow a 4-step process to help underfunded businesses and try to maximise the chance of loan success and in obtaining a larger loan quantum.
| 1 | Consultation and Assess | To understand company’s financial situation. Sign contract with loan advisor (no upfront fee). |
|---|---|---|
| 2 | Profile and source | Create a profile and source for funding products. Assess your chances of success through informal channels. |
| 3 | Reports and Justifications | We prepare a confidential report along with your loan submission to our lenders to highlight the key strengths of the company. Other loan consultants do not do this. |
| 4 | Loan Approval | You only pay us a fee upon successful loan approval. |
Underfunded businesses should follow a 5-pronged approach to get a business loan.
1. Establish a relationship
If possible, get to know your business banker now, before you need financing. This will give your banker an opportunity to get to know you and your business, how you think, what your goals are, what the financial situation of your business is.
Building a relationship with the lender you are currently working with can help them get to know the intricacies of how you operate your business. They want to know who your customers are, who your vendors are, and what’s going on in your industry. If they can measure different kinds of health and stability indicators for your business, they might be more likely to renew your financing at a lower rate down the line, or graduate you to a better product.
Letting the lender understand your business can only help you out. But if you aren’t open to building a relationship with your lender, then it may be best to work with a reliable loan specialist who may have established relationship with the many lenders in Singapore.
And the best news is, the services of an independent loan specialist is often free. For starters, you should read up more so that you have some basic understanding of how an independent loan specialist can help you in your search for the right loan.
2. Develop a plan
Lenders like to see an owner with a business plan. The business owner needs to show why the business will be successful before getting business loan.
And they should have projections to show that they’ve thought about what kinds of revenues and costs they’re going to generate.” In other words, a business plan clarifies why you need the money, how much you need and how you will repay it.
3. Be prepared
The documents required will be determined by the type and amount of credit you need. It may be as simple as a single-page application for a business credit card, or it may require business and personal tax returns, and financial statements.
It is good to understand the legal jargon in that stack of papers you will have to sign before the small business loan is disbursed. A close look at those documents now could save you a lot of headaches later. Be mindful that your bargaining power over your small business loan vanishes completely after you’ve signed the documents.
The small business loan documents could be a bit overwhelming, but with the help of a lawyer of an independent loan specialist, you can get a full understanding of what the legalese means. In fact, many independent loan specialist encourage loan applicants to understand the loan documents before they even complete a formal application for a loan.
Generally, it’s a good idea to get the loan documents ahead of time so you have a chance to review them for a couple of days before getting business loan. Most lenders won’t have a problem sending advance copies of the documents, but they will generally only do so if they’re specifically asked.
The documents can be somewhat complex – which is why you may need an independent loan specialist to help you understand what the fine print means.
4. Make Choices
There are many loans in the market for small business owners and not all products may be the best fit for your business. What’s worse is, taking an unsuitable loan could be a huge setback to you personally, as well as to your business. So, an important factor is, work with your lender to determine the type of loan that fits your needs.
5. Think Long-term
Along with your company secretary your lender should become one of your trusted advisers. The relationship should not end once you have gotten your loan. As your business grows and your needs change, you should allow your lender to provide recommendations on other services, such as additional credit, cash management, merchant services, and retirement and succession planning.
Before getting business loan though, you need to talk to loan consultants. They can set you up on a path that can get you a it in a quick and seamless manner. Loan consultants have close links with the best lenders in town and can help you compare various loans and settle for a package that best suits your needs. You should also get yourself up to speed by reading up on some money saving tips.
Affordability Tools are also an important tool if you are considering to buy a property to house your business. Calculators especially, come in handy to help you ascertain the fair value of a property and find properties below market value in Singapore. You will also do good to find out more about Peer to peer lending versus that of SME loans so as to make an informed decision.
