In Small Businesses the business credit appears on the horizon as a growth opportunity. But before taking this step, consider the characteristics of the type of credit you could request and start comparing. Here we present the key factors that you should take into account before consulting Singapore business loan broker. However, applying for a corporate loan largely depends on your business type.
What characteristics does a business loan have?
The business credit is granted by financial institutions or through bank loans and credit lines. Its main function is to promote the growth of the company that requests it. The institutions that mainly deliver them are the banks, but also certain types of Financial Companies that offer greater flexibility to define interest rates and terms. A business loan must be above all an opportunity for growth, since in SMEs, there comes a time when the next step towards consolidation must be faced and business loans can be of great use towards this goal.
Why do I need a business loan?
Generally, business loans are requested by companies with a view to progress, grow and innovate. They can be used for the purchase of real estate, remodeling, expansion, etc. They also bring great benefits if they are used for working capital or to supply lack of liquidity in some companies. It is necessary to identify why you need the credit and if within your financial strategy this credit will generate profits or otherwise, it runs the risk of becoming a burden for the growth and health of your company. It is why it is necessary to have the real information of the financial health of your company and be based on it to consider the convenience of a business loan. First of all, you must take into account two key factors that make up a loan of this type.
Two key elements of business credit
Either due to ignorance of the situation, a bad credit history or poor decisions when applying for a loan, a significant percentage of small and medium-sized companies will see their operations in danger. To consider the viability of a business loan, it is necessary to take into account two factors:
Rate type: That is, if the financial credit will be of a fixed or variable rate. If it is fixed, you have the advantage of knowing exactly how much you will pay in the established period. On the other hand, if it is variable, it will be subject to external factors. There is also the modality of mixed rates that can start as fixed but that in a certain term become variable. We recommend that you carefully analyze the different options and compare them with the needs of your company.
Payment terms: The payment terms should be set based on the current status of your company. A Singapore business loan broker can offer flexibility when setting them. Depending on the institution or financial company you go to, the terms vary between 6 and 60 months. With this in mind, it is time to define what type of business credit will be most suitable for you.