Unless your company is self-funded or backed by investors, you are likely going to need a loan to grow your business or meet the company’s cash flow demands. There are different types of business loans, so before you apply for a loan you should first identify the type of loan that you want and if you can meet the requirements provided.
Here is what to expect the lender to demand when you apply for a company loan in Singapore.
1. Collateral.
Collateral is defined as an item of value used to secure a loan. The collateral is used by lenders in minimizing the risk if the borrower is unable to pay. The lender will ask for collateral to minimize her losses. If the company defaults on the loan, the lender can seize the collateral and sell it to recover the losses.
2. Business Plan and Financial Details.
A business plan may not be a requirement for all lenders but it is no exception. The lender should be able to understand if the borrower has a plan on how to utilize the resources. Financial information such as current loans, investments accounts, all bank accounts, and tax ID numbers are also ways of analyzing the company history with debt and financial information.
3. Accounts Receivables and Accounts Payable.
When your business uses assets as collateral, the bank will analyze carefully to make sure that they reduce the financial risk. For example, when you pledge accounts receivable as collateral, the lender will certify that those companies are solvent and therefore they can accept a percentage of the value as a backup.
For accounts payable, they want credit references from your suppliers on account they can vouch for your payment history with your company.
4. Complete and Audit Financial Statements.
The latest balance sheet is important as it shows the assets, liabilities, and capital of the company. The profit and loss statement for the 3 last years shows enough history of your business and they can indicate to the lender that you have good credit to pledge as collateral.
Engaging an auditor to audit your financial statements indicates to the lender that they can vouch and approve for your accuracy in the preparation of financial statements.
5. Credit Score.
A credit score is a number that ranges between 300 and 850 and is used to determine a customer’s creditworthiness. It is mainly based on credit history where they check on the number of open accounts, repayment history, and the levels of debt. Lenders will evaluate your ability to pay the loan promptly by using a credit score.
A good credit score will qualify you for the best interest rates and approval for the loan you have applied for. Therefore it is important to ensure your credit score has a good rating for you to acquire loans easily and have bargaining power on getting loans at a lower rate.
Conclusion.
Applying for a company loan in Singapore may pose challenges applying for the first time and being able to meet the specified requirements. However, with all the documents and paperwork made available, you a guarantee that the process of approval will take a short period. For those interested in getting a company loan, we can guarantee that company loan in Singapore is reliable, boast high loan approvals, and are licensed, money lenders.
