The essential factor in starting a business is getting and managing capital. You need more capital to develop your business and boost your profits, regardless of its size. You can use the most effective way to apply for business loan and obtain the financial assistance you want for your company. Using a business loan, you can grow your company in a number of ways.
Due to its booming economy, robust trade, good infrastructure, open policies, positive investment environment, and skilled workforce, Singapore is among the most sought-after locations for business. The availability of business financing options is another important factor that attracts business owners from around the world.
If you want to launch or grow your small- or medium-sized business (SME), you can apply for an SME loan and use the money to:
- Improve or diversify your company
- construct infrastructure
- Invest in inventory
- Purchase machinery
- Employ employees
- Increase operational expenditures
- Develop your marketing
You can grow your commercial business to a higher level with the right planning and funding. To generate income, preparation and wise money management are necessary. Furthermore, it is also important to comprehend why you must borrow and how it will enable your company to meet its financial obligations.
You can address your cash flow problems by obtaining a business loan. In addition to covering their basic operating expenses, SMEs procure money to finance their growth or other projects. Banks like DBS offer business loans to SMEs to increase cash flow, deal with seasonal sales fluctuations that result in low sales, and seize new business opportunities. Here are some creative ways that help SMEs with their funding needs.
1. Business Loans
For businesses to remain competitive in the market, the majority of SMEs would like to grow or diversify into new markets. Having enough cash flow will enable them to expand their company. Compared to traditional bank loans, DBS business loans are simpler to apply for and obtain. It is centred on the bank’s evaluation of your credit, though. Any company that has a positive cash flow and high yearly sales can pertain to a bank loan for business. Even businesses that are not qualified for loans with government assistance are considered by many banks.
At a reasonable rate of interest, you may borrow a maximum of SGD 500,000 for a maximum loan term of 5 years. Other characteristics include:
- Simple to apply for and use online, with information available at any time
- Digital application process
- Interest rates that are competitive and help savings
2. Overdraft Services
With an overdraft facility, SMEs can also access a revolving credit line from DBS. Within the permitted credit limit you may withdraw money for business expansion or operational expenses. The DBS’s overdraft facility has the following features:
- Through your business account, you can access money quickly.
- Flexibility to borrow only the amount you need
- Pay interest on the amount of your overdraft that is used
- You can quickly apply for it by accessing your information at any time
3. Working Capital Loan for SMEs
Businesses having a minimum of 200 employees and a group income of SGD 100 million are eligible for a business loan.
In addition, an SME Working Capital Loan must also have a 30 per cent domestic shareholding and be registered in Singapore. Such businesses are eligible to borrow up to SGD 500,000 and pay back it in 5 years.
4. Investment Debt Finance
Reputed banks provide venture debt financing if your company qualifies for a secured non-convertible loan. It works very well in equity financing as a strategic instrument to:
- Reduce equity dilution: By taking out venture debt, your business can grow rapidly without diluting its ownership stake.
- Venture debt serves as a hedging tool against high-interest rates, helping to reduce the price of financing and safeguarding your company from them.
- Accelerate growth by using this working capital loan to pay for company expansion and capital investments.
The following are some distinctive elements of venture debt financing:
- Enhances equity returns
- Simple access to the international network
- Minimal dilution of equity
- Gives money to extend the runway
- Interacts with seasoned business professionals
Your startup business should have a commercially viable business plan for venture debt financing.
5. Block Discounting
Block discounting is the process of borrowing money secured by future earnings. This credit facility is available to auto dealers and credit companies. Top financial institutions like DBS Bank assist you by purchasing blocks of lease or hire-purchase contracts while leaving you in charge of managing and obtaining customers’ instalment payments.
The bank disburses funds equal to the purchased and discounted agreements. Repaying blocks allows you to raise additional funds, which increases the working capital available for subsequent agreements.
Business owners can improve cash flow by distributing funds held in the employ or fixed-term agreements could benefit from the block discounting facility offered by the banks
Block discounting has some unique characteristics such as:
- Better cash flow
- A new source of revenue that enables a company to turn a profit while still receiving loans and funding
- The repayment schedule makes it simple and adaptable for auto dealers to manage and plan their financing.
- Because the block discounting facility does not require an immediate payback, it is safe and dependable in the current unstable economic climate.
6. Supply Chain Finance
Cash flow in the distribution network is optimized with the aid of supply chain finance. It enables SME suppliers to receive early payment while permitting their clients to pay after a predetermined amount of time. Supplier and buyer financing are both included in the supply chain finance programs.
With a program-based solution, paper-free processing, and seamless onboarding, the finance company assists suppliers and buyers worldwide in releasing trapped working capital and reducing risk in the supply chain process.
The benefits are:
- Receive a capital investment loan at a low-interest rate of up to 70% of the buying order’s value well before shipment.
- There is no need for added documentation.
- Early payment on verified invoices with affordable rates
For supply chain financing, regular trade transactions and bank-to-bank terms are necessary.
7. Account Receivable Purchase
- Accounts Receivable Purchase is designed to improve your cash flow by unlocking up to 90% of your receivables.
- Take advantage of credit security against buyer default of up to 100%
- The bank will pick up the collection duties on your behalf and save time
- Reconciliation services are offered by the bank to increase your productivity.
- Protection of credit against buyer default
- Spend less time collecting payments as you will have them collected by the bank.
- Give the accounts payable reconciliation.
- Help to improve the efficiency of SMEs
8. Venture Debt Loan
For venture capital-backed tech start-ups in the growth stage Finance (VDF) aids in:
- Minimize dilution of ownership stakes
- Reduced overall financing costs
- Advance growth-oriented projects
- Access the international bank network
- Cooperate with seasoned entrepreneurs
- Strike a balance between flexibility and dilution.
- Boost the cash runway
- Enhance equity returns
9. Property Loan
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- Various fixed loan packages are available to meet your company’s needs. Adaptable loan terms
- If a SORA*-pegged loan package better suits your company’s needs, you can choose it, apart from the fixed-rate loan branding package.
- Take out a loan for 80% of the value of your home.
- Get one of the most attractive financing packages on the market and a large loan quantum.
- The bank’s evaluation determines the loan amount that is approved.
- Repayment could take up to 25 years.
How Do I Get a Business Loan?
- Use the business loan application platform of the bank to complete and submit your online business loan application. The most recent 2-year financial statements and 3-month bank statements may need to be submitted.
- Notify your guarantors that they have approved your application.
- On the online business banking app, check the status of your application.
- If your request is granted approval, the bank will make you an offer.
- With the assistance of a relationship manager, the offer can be approved offline or online.
- As soon as the money is allocated to your business account, you’ll get a notification.
By providing small and mid-size businesses with various operating capital loans to improve their cash flows, banks like DBS play a crucial part in boosting Singapore’s economy. Through business loans, SMEs now have simple access to capital to fulfil their immediate financial needs.
Planning ahead is necessary to take advantage of this facility. You can apply for a business loan and increase your working capital in Singapore. However, prepare your working capital loan application, review your bank account, make sure that you promptly repay your personal credit facilities, and keep your options open when you apply for working capital finance.