You believe that additional operating cash is required for your company to survive or expand.

Unfortunately, your company loan application was turned down by the banks. You believe a business loan broker can assist you in obtaining the funds you require.

Ask yourself: Why are you seeking a business loan broker in Singapore?

This is significant since it cements your company decision and directs your subsequent actions.

SMEs commonly hire business loan brokers because:

  1. They’d rather spend their time expanding the company and delegating the onerous application procedure to someone else.
  2. They’ve exhausted all possibilities and are unable to obtain a credit line from any financial institution;
  3. They feel that experienced loan brokers can give consultation services to effectively evaluate their business needs and recommend the appropriate business loans.

They’d instead delegate the time-consuming application process to someone else.

The majority of SME company loans available today are based purely on the documentation you submit. As a result, once you’ve acquired the necessary documents, it won’t take long to send them to another bank or financial institution for review.

They have exhausted their options.

Many loan brokers have strong ties to banks and financial organizations, making it easier to apply for a loan. However, you could be surprised to hear that some loan brokers communicate in the same way you do, namely through Google searches and phone calls!

They want loan brokers to understand their company’s needs appropriately.

Most loan brokers were previously employed as bank officers who spent time analyzing and aiding various small business owners. They can usually offer excellent advice and coaching on how SMEs might get a loan for a business (e.g.), bank statements should not go into excess).

Question 1: Find out how your loan broker can assist you in obtaining a business loan in Singapore.

Is the business loan broker using their connections to help you get a decent offer, or are they only posting internet listings?

Some of the broker’s solutions and services, such as the loan consultancy service, maybe more worth paying for than others.

Question 2: Find out how much this service will cost you in total from your loan broker.

It’s critical to understand all of the terms and conditions of this service, as loan brokers frequently need small business owners to sign a “contract” with them before providing their services.

This is done to assure that business owner will not refuse to pay them once the project is completed.

Common types of payments include:

  1. A minor upfront charge ($100–$300) and a percentage of the overall loan amount offered to the SME by a financial institution (1–3%)
  2. A more significant percentage of the overall loan amount and a free upfront service (2-5% )

Make sure you don’t sign any unequal contracts with shady business loan brokers.

We’ve witnessed examples where a loan broker “locks in” a small business owner with a contract for at least 8% of any loan that the broker manages to find (in 2018, no less).

The dishonest aspect is when the contract also wants the same fee even if the owner, not the broker, successfully obtains alternative types of financing for up to a year!

Question 3: Consider whether or not you can afford to pay for this service.

This is a fast method for determining the above from the fees:

  1. Unsecured Term Loan Interest Rate = 12% effective interest rate (EIR)
  2. Bank Facility Fee = 2% (paid upfront)
  3. Loan Broker Fee = 4% (paid upfront)

For a one-year loan, you’ll need a profit margin of at least 18% (a+b+c).

Question 4: Inquire with your loan broker whether there are any alternative sorts of loans that would be more suitable for your company.

Working with a professional has various advantages to business loan brokers in Singapore. Like choosing from multiple lenders and researching different loan kinds that may be beneficial to your company.

Every loan kind has its own set of advantages and disadvantages that you must consider.

Be skeptical if your loan broker does not take the time to explain these options to you. It could indicate that the broker’s interests don’t always align with yours.

This could mean that a specific bank or type of business loan product pays the broker a larger commission for referring your company.

So should you engage business loan brokers in Singapore?

Yes, you should, but find the right one. In general:

  1. Banks and relationship managers can respond much more quickly to business loan brokers.
  2. Brokers who specialize in business loans might assist you in negotiating a cheaper interest rate.
  3. Small business entrepreneurs benefit from the transparency and direction that business loan brokers can provide.
  4. In emergencies, company loan brokers can also offer a direct connection to the most suitable lenders.

 

Published On: September 22nd, 2021 / Categories: Uncategorized /