Published on April 7, 2021
Benefits to business financing in Singapore
What is a business loan?
Business loans refer to loans offered to a company to meet its business needs. These can include managing cash flow, business expansion, while other loans are offered specifically for certain business needs such as business vehicle loans or floor stock financing.
Contrary to belief, the term “business financing” is not the same as taking out a bank loan. Instead, business financing refers to individuals or businesses seeking money from a non-traditional source, such as an alternative financing or credit company.
1. The standard business loan
The standard business loan is an unsecured type of loan, this means that you are not required to offer your assets as collateral. Instead, you can choose a repayment term offered by the credit company or banks to pay it off. Most major banks in Singapore offer this to local businesses, with certain eligibility criteria such as the duration of business establishment and revenue.
2. Temporary bridging loans
This scheme is backed by the government and is used to tide all businesses through the COVID-19 outbreak. The loan is open to Singapore-registered companies that are at least 30% owned by locals, with the loan amount reaching up to S$5 million and a repayment period of 5 years.
3. Startup business loans
The startup business loan is more commonly offered to entrepreneurs and individuals who are looking to start their first business. This loan offers a smaller cap and has a low barrier of entry, making it easier for individuals to get a loan approval.
Business loans in the automotive industry
Generally, business owners in the automotive industry of Singapore or individuals looking to start their own auto dealership would know how expensive inventory is. Hence, these businesses often take up business or company loans to manage their inventory and showroom. Aside from doing marketing and advertising, business owners in the automotive industry often need to have an impressive showroom for their potential customers to see and test drive the vehicles.
One of the most common loans offered to businesses such as motor traders, or companies looking to do hire purchase is car financing, otherwise known as commercial fleet financing. Car financing is particularly useful for car motor traders to purchase a large volume of inventory or vehicles, and there are two options to go about repaying this loan – secured and unsecured loan.
A secured loan refers to the inventory purchased is used as collateral, hence if you default on the repayment, the vehicles will be used to repay the funds. On the other hand, an unsecured loan does not need any collateral and tends to have a higher interest rate. You should always speak to a trusted finance company in Singapore to better understand the loan options available for you.
Benefits of taking up a commercial loan
In addition to streamlining your inventory acquisition and reducing the financial burden of starting your business, there are other benefits that you can get from taking up a business loan with a reliable finance company.
1. Increase working capital
In business terms, working capital is used to pay short-term obligations such as your employees’ payroll, rental, machinery, and inventory. Taking a company loan can help you bear the bulk of the costs of your purchasing inventory. This allows you to increase your working capital whilst improving your cash flow and freeing up funds for other expenses.
2. Reduce administrative costs
With more cash flow, you can channel the funds you have on hand to other areas of your business. For instance, you can improve your marketing strategies, run more promotions, provide more training for your staff, and even expand your business.
3. Provide better customer experience
Taking up a loan for your company not only benefits your business but also provides your customers with a better experience. Aside from using the improved cash flow to buy higher volumes of inventory so that your customers have a wider selection of products to choose from, the money used for training your staff can also translate to better customer service.
For example, motor traders who take on car finance loans have the financial capability to bring in more vehicles for their customers to choose from and test drive. Having readily available stocks boosts customer experience and thus, improves the reputation of your business.
In conclusion, every business has different financial needs, thus it is important to always find out more about the loan that you wish to take up, and to choose a reliable finance company in Singapore to take your business to new heights.
Swee Seng Credit offers a full range of business financing options to meet your business needs and improve cash flow. Get in touch with our professional finance consultants to help you get started on your business journey today.