Why would a loan application be rejected?
Your loan application can be declined if a lender doesn’t think you can afford to repay the loan, either because you don’t earn enough or the lender can’t verify your income with the information you provided…. Your loan application may be declined if it doesn’t look like you’ll be able to take on new debt.
Why should I take a business loan?
Be it for a new startup or a growing business, additional finance can help keep your business momentum up. You can avail a business loan from FRcapital for your short or long term financial needs to avoid any form of working capital fall short or any timely opportunities that come along your way.
What is the business turnover ratio and how is it calculated?
The business turnover ratio measures the proficiency of a business with which it effectively collects their receivables or the credit it has extended to its customers.
To know how to calculate business turnover ratio, the total amount receivable from customers at the start of the accounting period must be added with the ending balance and divided by 2. The business turnover ratio is calculated by then dividing the total sales on credit by the average balance(excluding the cash receipts).
What is the minimum required turnover of business to be eligible for business loans?
To be eligible for business loan, the business must have incorporated for at least 3 years and must have filed Income tax for a minimum of 1 year. Also, a good business loan turnover ratio gives a positive reflection of business growth and profitability, making it a good profile for business loans.
How do I check my company’s credit rating?
Credit Bureau Singapore. You can request a copy of your credit file online, at any of the SingPost
branches, at the Credit Bureau office or at CrimsonLogic Service Bureaus. Prices reflected below are accurate and current: CBS Credit Report is chargeable at $6.42 (inclusive of GST).
How will my business information be kept safe?
We take your privacy very seriously.
Firstly, your contact details (company name, director’s name and number) will only be shared with
relationship managers who are interested to finance your business loan request.
What are the documents I need to prepare for a business loan?
- Acra business profile information
- Latest NOA of ALL directors
- Latest CBS report of ALL directors
- Latest 2 year of company’s financial statements
- Latest 6 months of bank statements
Ensuring that you have the right documents on hand before submission may increase your chances of
obtaining the right business loan.
Why are all these documents needed? How to obtain them?
1. ACRA Business Profile Information
(ACRA) – a document that shows your business information, directors and shareholders, as well as your company’s paid-up capital.
ACRA is used by financiers to identify the company’s directors, understand the type of industry you are in and ascertain who to bringin as a guarantor if required.
2. Latest 2 Years’ Notice Of Assessment (NOA) Of All Directors
The (NOA)-Notice of Assessment of the company’s directors’ for the last 2 years will be needed by financiers to understand their declared incomes.
the financier would need the company directors’ Notice of Assessment (NOA) over the last 2 years to find out about their declared incomes.
*You should note that the NOA here refers to the personal NOA of the directors, and not the company’s NOA.
The directors’ income in their personal NOA will be 1 of the factors taken into consideration to determine the business loan amount and tenor the business is eligible for.
The NOA, combined with the CBS Report, gives financiers a sense of the total debt-to-income ratio. If the amount of unsecured debts exceed the director’s income, financiers are less inclined to offer a loan because the directors are perceived as being less capable to repay the loan.
Proceed to IRAS to download your NOA.
Credits: Inland Revenue Authority Of Singapore
3. Latest Credit Bureau Singapore (CBS) Report Of All Directors
(CBS)-Credit Bureau SIngapore report are for financiers to view your company directors’ repayment histories, existing loans and outstanding unsecured loans.
The creditworthiness of the borrower is reflected based on their grades in the CBS report.
The general credit ratings range from AA-HH (AA being the best, and HH the worst).
You can either obtain your CBS report from CBS for $6 or if you have applied for a credit card previously, you can receive a free report within 30 days of application.
The highest possible credit score risk grade is AA. Grades of B or C indicate delinquency or late repayments, and grades of D or lower are often caused by defaults (the bank was forced to write off the loan).
Credit scores help lenders decide whether or not to approve loan applications and determine what loan terms to offer. The scores are generated by algorithms using information from your credit reports, which summarize your borrowing history.
What is your credit score?
Your credit behaviour as outlined above is aggregated into a score between 1,000 and 2,000. Those on the lowest end of the scale, that is 1,000 points, are flagged as having the highest risk of defaulting on a payment. They are rated HH. Those at the highest end of the score range, at 2,000 points, are perceived to have the lowest risk. And they would enjoy the best credit rating of AA.
Lenders will use the credit score as one factor in their lending decisions. Other factors may include your annual salary, length of employment and bankruptcy or litigation information. Your credit score may also influence whether the lender will extend loans to you at the lowest rates offered to the borrowers with the best credit rating.
Your account repayment history is kept on a 12-month rolling basis, for your credit score calculation. So, it is possible to rebuild your account repayment record within 12 months if you are on time with all your payments.
However, inquiries by financial institutions for your credit report will be retained for 2 years. Default records with the status of “negotiated” or “full settlement” will be displayed for 3 years. Default records with status of outstanding, partial payment and “sold off” will be displayed indefinitely.
How to improve your credit score risk grade in Singapore
To bring up your credit score to an AA (or close to it), you should:
Always repay loans on time
Avoid making multiple loan enquiries in a short time
Don’t have too many credit facilities open
Never default on your loans
Take and repay a loan to repair damaged credit
Credits: Credit Bureau Singapore
4. Latest 2 Years’ Company’s Financial Statements
The latest 2 years of your financial statements, which includes the last 2 years of profit and loss statements and balance sheets will also be required by financiers to determine your company’s historical performance.
*Your company’s auditors are usually responsible for preparing these documents unless using accounting software.
5. Latest 6 Months Of Bank Statements
The bank statement shows your company’s day-to-day transactions. The company’s revenues and expenses, as well as the balance sheet at the end of the month helps financiers gauge the ability of repaying the loan on time.
It also indicates the cash flow of your company.
*You can easily retrieve bank statements from the banks in charge of your corporate accounts.
In addition, you may include Accounts Receivables Aging List.
It lists down the names of your clients and the amounts that you are expected to receive from them for the products or services you have rendered.
The Accounts Receivables Aging List also shows your overall debts, how long these debts have been overdue, as well as your clients.
This document may be used for determining if you are eligible for invoice financing, another form of business loans.
In the event that your company has been in operation for less than 2 years, you can still submit your statements and documents for the past year to show the financiers what your company has achieved so far.
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