You may need business funding at some stage in the process of starting and expanding your business.
What is an Unsecured Term Loan?
The creditworthiness of the borrower/guarantor and other variables are taken into account when issuing an unsecured business term loan. There is no requirement for collateral on the part of the borrower to apply. Business term loans without collateral can be approved and disbursed quickly for this reason.
Business term loans without collateral are popular with SMEs because of their flexibility. Business growth plans, such as leasing a new retail shop, can be financed with these loans.
Business term loans that are not secured by collateral have substantially higher interest rates than secured loans because of this (loans that require collaterals).
Features of Unsecured Business Term Loans
Loan amounts of up to $500,000 are usual for an unsecured company term loan with a repayment duration of 1-5 years.
In addition to the interest rate, administration costs range from 1 to 5% of the accepted loan amount.
As a general rule, unsecured company term loans are repaid in principal plus interest. But in rare situations, these term loans may also feature a repayment plan that includes only interest servicing and a bullet payback.
Varying institutions have different loan amounts, terms, rates, and payback schedules. Unsecured term loans for businesses must be inexpensive and meet your business demands.
Business Loan Application Process
An overview of the standard Singapore business loan process is provided below, along with a list of what you need to prepare at each stage.
1. Apply online or at the branch
- Apply by any financial institution or bank that provides an online application platform, or visit their offices to do so.
- Prepare your MyInfo login for the online application, as well as your National Identification Number (NRIC).
2. First call back from a financial institution
- RM will contact you to learn more about your company and business (e.g., number of directors, type of business).
- Your RM will be better able to assist you if you are forthright about your company’s financial status (e.g., the number of existing loans that are still outstanding).
3. Document submission
- For business loan applications, there are five primary documents required.
- Some financial institutions may ask for additional documents (e.g., upcoming contracts/receivables aging list).
4. Second call back from a financial institution
- There may be a second call back after documents have been submitted for clarifications and details.
5. Process for approval
- It is the accountability of the RM to submit your documentation for approval.
6. Presentation of business loan proposal
- Once your request has been approved, the RM in charge of your case will present you with recommendations and solutions to meet your business’s needs.
7. Site visit
- The RM may request a site visit to your factory/company to better understand your operating procedures, depending on the sort of business you are engaged in.
8. Sign documents
- Consider the loan amount, interest rate, type of rate (simple or effective interest), penalties, and defaults before signing the loan agreement.
9. Disbursement of funds
- In most cases, monies are disbursed in the form of FAST payments to your company’s bank.
Consider the purpose of the finances before taking out an unsecured company term loan.
This type of loan is ideal for businesses who need extra funds fast to bridge their Taking advantage of a working capital gap fantastic business opportunity. Still, it is not sure to be approved.
Use the best financial product for the right reason. Investing in your business in this way will allow you to make the most of your resources and grow them over time.