5 Top Benefits Of Getting An SME Loan For Your Business

5 Top Benefits Of Getting An SME Loan For Your Business

When it comes to small and medium enterprises (SMEs), they need to diversify into other activities or expand into new sectors to face stiff competition. Other than these, SMEs in Singapore take on the challenges of high operational and rental costs. To meet all these challenges, they need extra funds, which they can have through an SME loan. Most small and medium businesses in Singapore opt for a business loan to grow and diversify.

Getting a loan can help your business, and if you are still unsure about it, then you need to go through the benefits of getting an SME loan for your business.

  1. Open to all types of businesses

Business loans in Singapore are offered by banks and other financial institutions to SMEs engaged in any type of business. It doesn’t matter if your business doesn’t qualify for a government-assisted SME loan scheme. You cannot survive if you keep offering the same product or service. To explore new markets, your business needs to expand quickly. This asks for additional funds, and taking a business loan can help you have sufficient cash flow.

  1. No collateral required

You can apply for a business loan without any collateral. A financial institution may ask for the FICO rating, which is a score to help evaluate the credit risk of SME businesses. A FICO score is designed based on a borrower’s data in five areas such as the payment history, types of loan used, present level of indebtedness, length of credit history and new loans taken. If you have a good credit record with impressive repayment history and no past obligation, you have a high chance of becoming qualified for a business capital loan.

  1. Flexible repayment period

A typical unsecured SME loan is offered with a repayment period of minimum one year and a maximum of five years. You may choose the tenure depending on the purpose for which you need the loan, and how fast you can repay it. If you are eligible, you can apply for a maximum of 5,00,000 SGD at a competitive interest rate.

  1. Manage cash-flow issues

Any business may experience cyclical downturns, and it is common that there are off-season periods or seasonal demands, where arranging funds will be challenging. You have to meet the operational costs and pay your staff, for which you need to have access to urgent money. With a business loan from a bank or financial institution, you can meet the unavoidable expenses. These loans are approved within a short period to help SMEs. If you can foresee the cyclical downturns, you can be prepared for them by applying for the loan early.

  1. Buy inventory and equipment

You cannot wait for customers to ask for a product or service if you are running an ecommerce business. To meet your customers’ demand, you have to stock or restock the inventory. The SMEs like restaurants and gyms need to invest in furniture and equipment when they grow. Similarly, they also need funds to keep the equipment in good condition to attract more customers. With an SME loan, you can take care of inventory or equipment management, and help your business develop further through more customers and returns on investment.

If you have access to a reliable bank or financial institution for an SME loan anytime to meet your urgent financial needs, it will help your business expand or diversify into new areas quickly. 

Janet Brown