You may have dreams of owning a business, yet you are not sure about the available funds to you right now. There may be some cash in the bank, but at the same time, it is impractical to simply exhaust all of these just for the sake of getting your business up and running. There is the risk of losing all that you have, which can be detrimental to your financial health. For some people, approaching a licensed moneylender in Singapore for extra funds they need for the business seems like a reasonable move. They do their research on the best moneylenders Singapore SME’s go to for financial assistance, then decide to take on a personal loan Singapore banks or moneylenders offer to their clients. Afterwards, with the additional cash on hand, they continue with their goal of starting the business according to their plan. But is it really a good idea to go through this step? Are there other options available for startups with insufficient sources of funds for their business venture?
If you are planning on raising some money to revive your startup plans, or perhaps you want to settle some expenses in the business that require a certain amount of cash, some boost in your finances is all you need. This is why a loan may be a viable option to take if you are in search of additional financing. But at the same time, banks are only willing to lend you money to take out for your business loan if you have an established venture going on. Also, if you think you can get some cash from an investor, it is not very easy to find when you are simply starting the business. Thus, it can get a little frustrating for project creators or first-time entrepreneurs who only want to make their dreams of owning a business come true.
Fortunately, there are many ways to move forward with your plans of starting a business. There is the option to take out a personal loan designed to fuel your business’ financial needs. It may even be more practical than borrowing money from a family member or a friend since you can have full control or ownership of the business – meaning there is no one to share the equity with.
If you are a fledgling entrepreneur, a personal loan may be helpful in your case. Securing this type of loan is not very difficult to do, as compared with a business loan. Mainly, a small business loan provided by banks comes with intricate steps. You will need to present a business plan, along with your financial statements prior to applying for the SME loan. Obviously you do not have these documents on hand if you are only starting with your journey as a business owner.
With a personal loan application, you only need to provide personal details with your bank when you apply for a personal loan. This is why it is much easier for startups to get a personal loan instead of a business loan. If you also need just a small amount of cash, there is no point looking for an angel investor when you can easily repay the loan gradually over a period of time. All you want is to concretize your business plan, and it should flow smoothly from there once you have it all set up. Generally, a personal loan is easily available and accessible. When you apply, several banks can already give you an approval with the funds available in 24 hours or even the same day. But then again, business loans usually take about 2 weeks for banks to process. This is quite a lengthy wait when you are in a rush to begin your business, particularly when there are bills to pay. So, if the money is not yet available and the expenses are piling up, a couple of weeks can be a pain to deal with. Your inability to settle your bills on time may mean bad news for your business. If you are just starting, then you are already up for greater stress if you are worried about not being able to pay for these business expenses that keep coming in.
Important Considerations With Personal Loans
While it is true that there are numerous benefits that come with a personal loan for business use, there are also some things you should consider. It is true that a personal loan used for your company is easy to obtain, plus there is a chance that the process is not as long as how it takes with a small business loan. But then, some limitations may be worth looking into before you jump in the decision of taking out this type of loan. There are downfalls that can make personal loans rather unattractive to most people. One of these pitfalls is the high interest rate, as compared with other funding source available to potential business owners or existing entrepreneurs. If you are thinking about taking out a loan from a commercial bank, the interest rate can be too high for you to handle. Startups, then, are at risk of facing more financial concerns along the way. But then again, there are many personal loan providers with a cheaper rate, unlike other online lending platforms for SMEs in Singapore. The charge may be 12 to 16 percent of the annual interest for these other online funding sources, which may still be higher than what personal loans may offer.
There is another serious item to consider when it comes to applying for a personal loan for your business. If you are the borrower, then you are responsible personally for the amount you loan. When you default on the loan, then your personal credit rating will be impacted, which will affect other areas in your life. But with a small business loan, defaulting on it will affect just your company. At the same time, your personal assets can never be seized by the lender. When you plan on taking out a personal loan, there is a maximum amount you can borrow. Depending on your income, the limit is at $200,000. But if you need a larger amount of money, this will not suffice for your business needs. On the other hand, a business loan may provide you with as much as $500,000, and this should cover numerous expenses in your company. So, if a large sum is what you need, a business loan appears to be a reasonable option for that.
Know the Alternatives
Additional funding options for a business are available, and you are not just limited to a personal or a business loan. In fact, you can consider crowdfunding, which has been gaining more and more popularity among a number of project creators. These crowdfunding sites include Fundedhere, GoGetFunding, and KickStarter, to name a few. You can obtain the capital you need from contributions made by the public, and it may not come with a long waiting period before you can receive the amount you need. Some government agencies even provide grants to entrepreneurs who are looking to set up their business for the first time. Depending on the industry where your business applies, you can get a grant that will help get your business venture up and running.
But overall, you need to do your research as you consider different options for funding source applicable to your business and financial situation. If you think that a personal loan is ideal for you, then be sure to compare the rates and terms offered by various banks and moneylenders in Singapore. The most important thing is that if ever you find one with a low interest rate, you need to make sure the quality of service provided is commendable. You want a reputable lender that has been providing a consistently positive level of customer service, which is essential for every borrower.
Once you have obtained the funds you need from a loan, be sure to make payments according to the deadline set by the lender. Maintain regular payments to keep your credit score in check, so you will not have a hard time with getting approved of more loans in the future in case you need one.