Acquiring Loans for Business Growth
More than 70% of businesses require loans for start-up. However, 80% or more do not survive the first three years, especially in Singapore. Some of the reasons for this alarming statistics are here. In case you’re planning to acquire a loan. Maybe you may have a rethink.
What to consider before acquiring a loan
1. Interest Rate
You will not dare to go for a loan with higher interest rate no matter the need for urgency. Interest rate in Singapore is as high as 20%. Even if it’s a multi-million dollar investment, as a business owner, you will wish to stay in business on a long term basis. The risk of higher interest rate can ruin your business especially when you are hit by unforeseen circumstances such as foreign exchange rate.
2. Variable Assets as against fixed Assets
Perhaps, one major concern for business owners who acquire loan in Singapore and are unable to pay, is the amount spent on variable costs. For instance, such as electricity bills, gas and serviceable products. As an Entrepreneur willing to grow his business, you need to acknowledge the fact that whenever your variable asset outweighs your fixed asset, you will be force to source for more funds. This is especially so if sales do not commensurate with your spending. If you are going to acquire a loan, your variable cost must be minimal.
3. Market Survey
A lot of first time investors acquire loans for business without actually knowing what they want to do with it. Most of the time, the loan is kept in the bank for months before they finally get a clue of what they it is for. By this time, the interest rate is already ticking like a time bomb. Market survey enables us to take decisive actions in business without guessing. It involves research on demand for a product or service. In addition, determining consumer preference, competition, foreign exchange. Furthermore, location awareness and having a projection of future market conditions.
4. Re-investing profit
In the first three years of business, the profit margin is not as high and expectations are not always met. Most business owners in Singapore make use of the little profit to service their loan and often do not have enough to reinvest. If you are acquiring a loan for business growth, there is the need to ascertain if the profit margin will be enough to service debts or repay loans. You can do this by employing the Pay Back period model.
Are you looking to get a loan for your business to expand their operations? You can trust us, one of the best licensed moneylender that you will be able to find in Singapore. We have a team of people who specialize in providing business loans to SMEs. We strongly believe that SMEs are the backbone of our economy.
If your business needs a loan to expand or increase your operations, get in touch with us. Our manager will contact you as soon as possible with regards to your loan application.