If you own a business in Singapore, chances are that you’ll require some financing at some point in your business journey. Business term loans in Singapore can be used as; startup capital, for business expansion, to boost working capital, finance inventory purchases, and purchase commercial property, among other uses.
Here is a complete guide to business term loans Singapore. Ready? Read further for more information on everything you need to know about the loan.
What is a term loan?
This is a specific amount of money given or advanced to the borrower for a fixed period, usually between one to ten years, to be paid back at an agreed interest rate.
Features of a term loan
- Involves a specified amount of money
- The loan tenure ranges between one and ten years
- Has a specified repayment schedule
- Paid from future cash flows of the borrower
Types of Term Loan
There are three main types of term loans based on the duration of the loan, namely, Short-term, Intermediate, and Long-term.
Short-term Term Loan – It is a single-purpose loan that matures in one year. Mainly, it covers unexpected cash shortages or emergencies. It helps to protect loss by boosting cash flow or to tap some good profit from an emerging business deal. In other instances, it is used to finance working capital.
Intermediate-term Loan – As the name suggests, this type of loan falls between short-term and long-term loans. It runs for a period between one and five years. It involves higher loan approval rates as the loan can be spread for several years, making the installment affordable.
Long-term Term Loan – The loan takes considerably a longer period of time, between five and ten years. Mortgage and property loans are the main loans that take the form of long-term term loans.
Having understood the types of business term loans available, the next step is to place an application with a lending institution. Below is a typical process of applying for a loan in Singapore.
- Place an application online or deliver it physically at the lender’s offices.
- Receive a call back from the lender immediately they receive your application seeking to know more about your company.
- Submit the required documents
- Second callback from the lender for clarification on documents and information provided.
- Loan approval process
- The signing of the loan contract form
- Disbursement of the funds
Having understood the types and process of application, the next question should be; where do I get this loan?
A business term loan is available at all lending institutions. However, it is easily accessed by licensed money lenders compared to banks.
To save you the hustle of searching for the best lender in town, follow this link to learn more about this loan and other types of loans.