Are you a small or medium-sized business owner in Singapore who is hesitant to apply for a loan? Don’t let myths and misconceptions hold you back! In this blog, we debunk some common misconceptions about SME financing in Singapore, so you can make informed decisions and secure the funding your company needs to grow and thrive.
Top Two Misconceptions about SME Financing in Singapore
The top two misconceptions about SME financing in Singapore are listed below.
Misconception 1: As the owner of a small or medium-sized enterprise (SME), I will need to pledge all of my personal assets as collateral to get a loan.
The idea that getting a loan from a bank means “risking it all” is a frequent myth among owners of small and medium-sized businesses. Getting an unsecured loan is a good idea if your company needs money. One example is the working capital loan from a financial institution in Singapore, which lets you get a loan of up to $300,000 interest-free for five years.
Misconception 2: There are set rules for paying back bank loans.
Many borrowers are under the impression that it is impossible to get a loan quickly with reasonable terms of repayment. An overdraft is a good option if your firm frequently needs access to cash. Bank overdraft facilities are rolling lines of credit, so there is no predetermined payback schedule, and you only pay interest on the funds you withdraw.
Debunking the Myth: You Don’t Need a Perfect Credit Score to Get a Bank Loan
The credit score you’ve established is just one factor that banks evaluate when deciding whether or not to grant a loan to you; other factors include the reason for the loan and the collateral. If your company has a low credit score but doesn’t need money immediately, you should improve it by closing unused credit accounts, paying off any outstanding debt, and not applying for any new loans until your present ones are paid off.
Other Common Misconceptions about SME Financing in Singapore
The other common misconceptions about SME financing in Singapore include:
1. A mountain of paperwork is involved in obtaining a loan from a bank.
If the thought of having to spend a lot of time filling out paperwork and making multiple trips to the bank is getting you depressed, try to keep an open mind. Financial institutions simplify applying for a small or medium-sized business loan by requiring only an online application. There is no need to physically visit a branch or provide any signatures. All you need is an application and the necessary supporting documentation. A copy of your NRIC, your most recent Notice of Assessment (NOA) for income tax, and your current list of debtors and creditors are all required.
2. Reducing debt is always preferable.
Don’t automatically assume that a small loan is preferable to a larger one. If you have good credit, you can borrow more money from your bank at a cheaper interest rate. A large loan could assist you in achieving your business goals faster, depending on how you intend to put the money to use.
Small and medium-sized business owners in Singapore, don’t let myths and misconceptions hold you back from obtaining the financing your company needs to thrive. Remember that pledging personal assets as collateral, strict repayment rules, a perfect credit score, mountains of paperwork, and reducing debt may not be your only options. So, do your research, stay informed, and take the necessary steps to secure SME loans in Singapore for your business. You can achieve your goals and take your business to new heights with the proper funding. MSME Blog empowers small and medium businesses with expert financing, technology, and policy solutions to succeed in the global economy.