As you try to raise funds to help boost your start-up project. Or when you are seeking a short-term bridging loan. It could be for paying off a business bill. You might find yourself requiring additional funding more than several times.
The challenge, however, would be finding the right money lender singapore. One that is ready to offer you small business loans. Or even finding an investor willing to support you. Particularly when your company is short of funds or are starting out.
Even then, some Singaporeans have been going for personal loans. This they use to fund their startup businesses. You might be wondering whether this is actually a good way to fund your business.
Here, is a look at the pros and cons to consider. This is before going ahead and getting the personal loan.
The Advantage Of Getting Personal Loans For Your Business
Personal loans have several distinct aspects. This aspect will be useful for budding entrepreneurs. To start with, this loan is easier to get than the small business loans. On many occasions, the bank requires an objective business plan. Also, they need financial statements ahead of offering you the SME loan.
The issue is that you will not have any of these to persuade the bank. More so since you are a startup. and just beginning your journey. But, moneylenders normally only need your personal details. This will help lenders be able to offer you the personal loan.
Easy access makes personal loans more beneficial. Especially for Singaporeans who are only starting out. This is when compared to accessing an investment or SME loans. Even if it is from angel investors. More so when you need a small loan amount. That you intend to repay bit by bit over some time. This you could be needing to help you fully establish your business idea.
A second benefit is that the personal loans are available readily like in loan advisor. Soon after you apply, many moneylenders will give you the approval. This will also mean that the loan funds are availed under 24 hours. As regards the banking institutions they might take about two weeks. For them to process the loan application.
As far as operating a small company is concerned. Speed is of the essence. More so when you have to manage your bills. At the same time, you still have to get your receivables. Failing to settle your bills punctually.
Simply because you do not have ready cash at hand. It can cause a devastating impact on your business. This is regardless of whether you know that a client will be paying. Even if it will be in the near future.
Downfalls Of Using a Personal Loan For Your Enterprise
Although personal loans will help your company in important ways. It has some downfalls as well. To start with, personal loans mostly attract higher interests. This is when compared to many other funding options open to business owners. More so those offered by commercial banks.
Even then, with some research. Several of the ideal personal loans are a lot cheaper. When they are compared to most offered online. That is through the SME loaning platforms accessible in Singapore. These platforms often charge annual interests of between 12-16%.
Still, this may not be the biggest downfall of using personal loans for your business. Rather, the biggest downside you need to consider. It is that as a borrower you are personally accountable for the loan.
Meaning that by defaulting on the personal loan. You will be hurting your personal score. At the same time, you will create other troubles in your life. On the other hand, small business loans will only be provided to your company.
Therefore, defaulting on this loan will only bankrupt your business. At the same time, it is protecting your assets. Thus they will not be taken over by the money lender.
Another possible problem for a borrower would be. Personal loans normally have a maximum limit of borrowing at S$200,000. The SME loans, on the other hand, could go up to S$500,000.
Alternatives to personal loans and SME loans
The use of personal loans to fund your business may be a good thing. Especially for business owners with a good credit score. At the same time, they do not need lots of money. Yet, as someone who is not able to repay the loan comfortably. That is when things do not pun out well. This is considering the risk of straining yourself with the loan. It can possibly affect your own life and get overwhelmingly huge.
When you cannot find investors or banks. That is ready to offer you an investment or a small loan for your business. There still are other options to source for funding.
To start with, there are numerous crowdfunding platforms. These include FundedHere, Funding Societies, GoGetFunding, and Kickstarter. These platforms will offer you with many different types of capital. This includes products like equity investments, pre-purchases, loans and even donations. This you can get rather fast.
Of importance, is that you take time to research. Make sure that you search and look at a number of different choices. In so doing you will be able to find the best form of financing. This will also be considering the costs, terms, and structure.
These should all be suitable and convenient for you. This way you will be better placed to continue growing your company.
As you look for ways to raise funds to grow your start-up company. Also when you are looking for short-term bridging loans. It could be for the purpose of settling business bills. It may even mean that you eventually will be needing extra funding. That is more than several times. Even then, it may be hard finding the right moneylender. A lender that is willing to offer you small business loans.
In such situations, many Singaporeans end up taking out personal loans. They often use the funds to improve their startup businesses. Even then be sure to look at the positives and downfalls of personal loans. This will help you find the best loan option for your business.