A business opportunity comes and you’re lacking for extra funds. To capitalise on this opportunity you may need to take a business loan in Singapore. While you are searching for a loan or funding opportunities, you might encounter a business loan consultant or also known as a Small business loan broker or SME loan broker. You might be wondering if it’s an advantage to engage with a SME loan broker to secure an extra working capital to take your business to the next level.
But, what really an SME loan broker does? We know that applying for a business loan can be a tedious process. So, can a small business loan broker help you in securing an ideal loan offer to help you achieve your business goals? Or, is there really a need for hiring one?
Together, let’s uncover the role of an SME loan broker and see if it is ideal to use one.
What an SME Business Loan Consultant Broker in Singapore Does?
You may also come across a mortgage broker, it also means the same with a small business loan broker or an SME broker. The SME loan broker acts like a middle person between a borrower and a lender or a financial institution.
An SME loan broker works as an intermediary in sourcing out a suitable loan offer for a borrower. His key responsibility is to ensure a smooth loan application process. He will help in fulfilling the creditor’s requirement and be able to turn out a successful application.
What are the Benefits of Engaging with a Small Business Loan Broker?
As we can observe, an SME loan broker can help us in getting an extra step closer to a preferable loan deal. But what are the benefits of engaging with a loan broker?
Although some small business owners may find that they can do the searching for the right loan offer and do the application process on their own. But, some may find that dealing with a small business loan broker is an advantage. And, let’s find out why.
Below are the key benefits of using an SME loan broker:
Save time and effort.
Instead of a borrower comparing from a huge list of business loan offers, a broker can do the job. He will work on comparing various interest rates of loans and will give the best SME loan offer.
If you need to find a business loan fast since a business opportunity or the need for working capital is time-sensitive, a small business loan broker is the right one to approach. They can help you in getting the funds that you need much faster. But, why? Since they have the skill and knowledge of all the requirements and processes especially with banks. Therefore, it will turn out that you can have a loan application in the shortest possible time.
A multitude of contacts and networks.
Those business loan brokers working in the industry for years now have already built a network and list of reliable lenders such as banks or private financial institutions.
They have connections to reliable lenders in the industry. By using them they are knowledgeable on how to work with various lenders. They are also familiar with matching a borrower with the right business loan deals. This implies that the cost of dealing with a broker means that you are paying for his connections.
Offers access to an array of small business loan products.
As having a network of financiers, a loan broker is always up to date with the latest offers and promotions from a number of different lenders.
The greater the broker experience and network within the industry, the better access you can gain to its wide range of loan products. Thus, you can able to find a better loan deal and interest rate that suits your funding needs.
Getting the most favorable business loan terms.
With the broker’s expertise and network, he is familiar with the terms of financiers. He can help in collecting and choosing the best loan offers with ideal terms and rates in the market that matches your needs.
A loan broker is not only familiar with business loans but can also help you in applying for different types of Government-assisted financing schemes such as the Enterprise Financing Scheme (EFS). Thus, he may help you in sourcing out for other funding options.
Expertise and flexibility in meeting your business loan needs.
You might be having some credit issues while applying for a business. With a business loan broker he can help you in having a smooth flow of application even there’s a lot of bump along your way.
He can also help to spot an ideal loan offer and if it has a reasonable rate. When it comes to secured loans, he is also familiar with all types of collaterals and will give you the best advice. You may also count on him when it comes to much-complicated financing such as factoring. Simply, he is the right person to ask for when it comes to understanding business loans.
A successful application may not be guaranteed especially if it’s your first time, but a business loan broker can help you in finding another funding option. So, even if you got rejections, there is always a plan B for a good SME loan broker.
What are the Disadvantages of Using an SME Loan Broker?
When hiring a small business loan broker, you may encounter some of the disadvantages, and below are the following:
Hiring a reputable loan broker means there is a fee.
You have to pay the fee of their expertise and this may involve charges from 3% to 6% commission based on your approved loan amount and there are some who will ask you for a flat fee. By engaging with a loan broker means that you have to prepare for the cost of their service.
Selecting from numerous loan brokers may take a lot of time.
Currently, you will observe that there are numerous small business loan brokers in Singapore. You have to spend some time finding a trusted loan broker. He must be someone that understands your funding needs. You truly have to give some of your time in searching for a good loan broker or else you’ll get to face some issues.
Hiring a broker may mean a risk.
The loan broker will represent you in getting an ideal business loan, but there are others who may give you a higher loan offer and are not aligned with your funding needs. They may apply this tactic since they get a cut from your loan amount.
When You Should Get an SME Loan Broker in Singapore?
As we weigh the advantages and disadvantages of engaging with SME loan broker, we may see that they are beneficial in finding a reliable business loan offer. But, when is the ideal time to use them?
Below are the circumstances that you’ll be needing a loan broker.
It’s your first time applying for a small business loan.
If you are having a hard time with the application process, having a loan broker can be of great help. As mentioned in the key advantages, a good broker has the experience and the network. He knows the requirement of every creditor.
There is a time constraint for your funding needs.
When you need funds fast and you don’t have time to go over a long list of lenders and loan deals, having an SME loan broker can be a big help. You can focus on making your business runs smoothly while the business loan broker will do the comparison and the paper works for you with the ultimate goal of getting the funds you need in the shortest possible time.
You have trouble with your credit history.
If your business is lacking a good credit history, you may have a hard time applying directly with banks. With a loan broker’s wide range of contacts, he knows an ideal lender that can fit your business profile. And, will give you sound advice on how to improve your credit history.
Your application was rejected by banks.
A business loan broker can help you to find another financing option in the case that your application was rejected by banks. He will open the doors for multiple financing options that can fit your credit profile and needs.
Things to Consider Before Hiring an SME Loan Broker?
You might be considering hiring a business loan broker. Since they will act on your behalf to get a successful funding application, it is essential that you need to engage with the best one. After all, there is a cost involved in hiring one and you don’t want to get it wasted.
Here are the key considerations when looking for the best business loan broker.
Must be a Licensed SME loan broker.
You have to make sure that you are engaging with a legal business loan broker. He must have a working contact number and operate in a registered business address.
Provides a transparent service fee or commission rates.
If a broker can’t answer the exact commission rate or service he will get, you can walk away. After all, you deserve something better, someone, that is reliable and can answer every question you ask.
Checks your financial and credit history.
An initial step a trusted loan broker must do is to review your financial and credit history. This will be his initial basis for finding a suitable loan offer for you. He will also give actionable advice that can help you improve your financial and credit history.
Doesn’t guarantee loan approval.
Always remember that when it comes to loan approval, a creditor or a lender can only make the decision. Even you engage with a competent one, there is still a chance for rejection. Why? Creditors will still go back to your financial and credit history.
A good loan broker will not only advise but will also help you in finding alternative financing options, in times that you get rejected with your business loan application.
So, Do You Really Need One?
Engaging with a loan broker will depend on your current financing needs condition. If you having a hard time applying for a business loan, you need quick funds and you agree to the service cost of hiring a business loan broker, then you may consider hiring one. But, it must be a good one.
You need a good broker that understands your financing needs and be able to find you a suitable lender. It must be someone that does not provide a guaranteed loan approval but someone that is flexible and can able to find you alternative financing options it times that you got rejected from banks.
Remember, either using or without using an SME loan broker, a business loan is helpful in making your business goals.
Start finding an ideal business loan offer with the EasyFind Loan Matching Platform.