Loan Broker

Call: +65 8336 3133 or Email Contact@Frcapital.sg

You might have an approaching need for extra working capital in your business. As you research potential sources for a loan, you might have come across the services of an SME loan broker in Singapore.

But what precisely is an SME loan broker? How can such a broker fit into your idea of getting a loan to drive your business forward?

Here we cover the following topics to give you a greater understanding of what a loan broker is.

Your loan broker for life

We will help even if you have had past credit events or events in the form of foreclosure(s), bankruptcy(ies), late payment(s), collection(s), charge-off(s), etc., for Non-Prime loans.

A loan that tailors to your needs

Our team of experts is well-versed in the money lending industry and will find a loan tailored to your specific needs. Your interests will be our number one priority.

An hour is all it takes

Sounds simple enough? Well, it should be!

Differences between an SME loan broker and a Direct Lender

What Is An SME Loan Broker?

IN SINGAPORE, an SME loan broker is also called by other terms such as mortgage broker, business loan broker, or business loan consultant. Regardless of the term, the services they render are generally the same.

A loan broker is essentially a middle man that sources the best loan deals to suit your business needs, advises on how to optimize your application, and helps you successfully secure a loan from a lender.

It is the broker’s responsibility to compare different available loans that are most suited to your business necessities. That said, it may not necessarily be in the broker’s interest to make the loan application on your account. 

In short, having a broker is an extra step in the string of a loan application before you approach the recommended lender. 

How Can An SME Loan Broker In Singapore Help You?

You might be wondering, why would you require a loan broker when you can apply for a business loan yourself?

Well, you can brush aside the need for an SME loan broker if you’re an established borrower with a strong network of possible lenders. Furthermore, if your need for a business loan is not urgent, you probably don’t require a loan broker to do the research legwork for you. 

Some borrowers, though, may find a loan broker’s services required, mainly if they are new business owners or novices in getting any business loans.

Having an SME loan broker is akin to getting a consultancy service that would help identify your business needs, recommend various relevant loan options, and perhaps even advise on improving your company’s credit score

As loan brokers typically maintain a strong connection with an extensive network of lenders, they would be in an excellent position to advise on the best loan options for your business needs.

Working closely with banks & private financial institutions keeps loan consultants in the loop about the latest available loan products or promotional business loan packages. They can, hence, assist with loan rates comparison from different lenders, a task that new borrowers may obtain challenging to do on their own.

Apart from loan offers, an expert broker with years of experience could bring to the table advice on issues such as:

  • Laws & regulations that could legally defend you as a borrower
  • Fees required by lenders, aside from interest rates, that you might not be aware of
  • Required documents that could increase your chance of getting a loan
  • Types of collateral required

Are you thinking of getting an SME Loan Broker to source for your business’s financial needs? Read about the advantages and disadvantages here.

What can we do for you?

What Hiring An SME Loan Broker In Singapore Would Cost You

Getting that specialist input from a broker who has an eye across a large section of your market and industry will incur additional cost in your whole loan application process.

While some loan experts charge a flat fee for their assistance, others are commissions based on a percentage of the approved loan amount. The rate could range anywhere from 3% to 6%. Payment is usually made after a service is completed and the price is paid for by the borrower.

Loan brokers may also factor variables into their payments, such as your loan size, a financial position as an applicant, and the complexity of your loan application. They may impose a higher broker fee if you have credit score issues, difficulties in cash flow, or missing documents in your application, as such situations demand more time & work from the broker.

Some brokers might also ask for a non-refundable processing fee upfront to protect their position & ensure your commitment. But, this is not a standard practice amongst loan brokers.

SME Loan Broker in Singapore
Role A middle man between borrower & lender
Responsibility Consultancy Source & advise on best loan deals for the borrower. Help to compare interest rates of various loans
Charges Usually, no upfront fees charge 3% – 6% commission of approved loan amount (Some may utilize a flat fee for their services)

What Are Direct Lenders?

Direct lenders generally fall under two categories: banks or private financial institutions.

While an SME loan broker in Singapore gives consultancy on the business loan applications, it is the lenders who have the resources to provide the funding you need.

They have straight access to a wide range of loan products to offer. Conversely, loan brokers can only guide you on the availability of these products & how best to apply for them.

Banks

In assessing your loan application, banks would scrutinize your personal and business credit score, business plan, financial projections, & revenue performance.

You can expect a smooth-sailing loan approval process if you have built a trusted relationship with banks & have no issues with your business’s cash flow or credit score.

Though, do expect hiccups in the loan application if you’re in a complex situation such as:

  • Having a lot of loans under your name
  • Having poor personal & business credit rating
  • Not reaching minimum requirements set by the bank

Did you applied for a business loan and got rejected? Here are some likely reasons why your application didn’t go through.

Private Financial Institutions

Private financial institutions are more flexible in evaluating a loan application. They are usually permitted to provide you with the extra funding, even if your company is less than a year old. For example, private financial institutions such as Capital provide financing for at least ten months for companies in operation.

In contrast, you would find that banks might not even acknowledge your loan request if your company is new with no visible financial history or revenue performance to back the application.

SME Loan Broker & Direct Lenders: When Should You Approach Them For Business Loans?

Each company has its unique use for a business loan.

The advantages of getting an SME loan broker or applying straight to direct lenders depend on the nature, age, and performance of your company,

When To Approach An SME Loan Broker

SME loan brokers have an extensive network of lenders that give various loan packages.

Some company owners might be irked by the thought of hiring an SME loan broker in Singapore due to the extra step and cost of a business loan application.

Though, there are some circumstances in which you would find that getting the advice of a loan consultant might be necessary:

  • You Lack Experience In Applying For Any Business Loan

A loan broker would assist you in giving an unbiased perspective on the pros and cons of multiple loan options.

  • Your New Business Has No Substantial Revenue Performance

A loan specialist has the responsibility to guide on how your company could improve its chances of securing a loan, despite the lack of financial history & business plans

  • You Don’t Have Time To Scout Around For The Best Business Loan Choices

Outsourcing the search to an SME loan broker saves you time. You can focus on your business operations while they consolidate suitable loan choices to match your business needs.

  • Banks Have Declined Your Loan Applications

A loan broker could advise on an alternative strategy that could be helpful, especially if you are in dire need of extra funds.

When To Approach Direct Lenders

Not every company would reap the benefits of getting an SME loan broker in Singapore. Direct lenders can offer cheaper rates, & you wouldn’t require to set aside a budget for a middle-man. If your company meets the following, approaching a direct lender may be a better option.

  • Your Business Has An Established Financial History

Typically, businesses with an established financial history & a proven track record would have forged a strong business relationship with direct lenders over the years.

  • You Have Strong Personal Credit & Business Credit

If your company is new or doesn’t have an excellent credit history, an SME loan broker might add value. Otherwise, they may not be able to provide insightful advice to your application.

  • You Have A Solid Business Plan & Financial Projections

Direct lenders are familiar with going into business plan operations, so they’d be able to immediately recommend a loan from their range of product packages if you have a clear business plan.

Are you applying for a business loan? Reach out to Capital to take care of your business financing needs today.

Read Our Other Articles.

Get Your Business Loan Now.

Apply now,  and receive your business loan within within 24 hours*

FAQs About Loan Broker

A loan broker or mortgage broker is the middle person between the lender and the borrower. While a borrower may borrow directly from a lender, a lending agent may aid a lender in deciding which lender meets the financial targets of the borrower. Using a credit broker can save the borrower time and help borrowers find a lower rate. Especially if the borrower is a business owner, it is more effective and advantageous to use a loan broker.

However, borrowing directly from a loaner can be more reasonable for some small enterprises or individual borrowers. The loan agent usually charges a fee. This is because you may set the lender this fee, but the borrower is occasionally charged. The cost can amount to 17% of the loan amount and 1% of the loan amount.

A mortgage broker is a broker that brings together mortgage borrowers and mortgage lenders but does not use their funds to borrow. A mortgage broker supports lenders and searches for the best fit for the borrower’s financial situation and interest rates. The mortgage broker also collects the borrower’s documentation and passes that documentation to the mortgage loan for signature and approval. The broker receives a commission at closing either the debtor, the creditor, or the two.

No one should confuse a mortgage broker with a mortgage banker who closes and finances a mortgage on its funds.

Personal brokers — also known as lender connection services — work like mortgage brokers: they help you find much about your personal credit. Personal lending brokers are provided with an eligibility criteria network of lenders for potential lenders.

If a personal credit broker can find a lender that fits your needs, you will present a pre-approval offer. After this, you will probably have to end your offer directly with the lender, although some brokers can also make this part of the procedure easier.

Lender connectivity services provide ease of use. Any personal loan broker requires you to file just one request instead of filling out multiple applications for a range of lenders. Through the broker, you receive proposals that can save you time.

It could be perfect if it is difficult for larger financial institutions to meet the standard eligibility criteria. Because brokers tend to understand various lending demands of different lenders better, they will not recommend products for which you will likely be refused.

To add everything, it is free to use a private credit broker. The brokers receive the loan commitment from the lender instead of charging you. You’re going to save time without paying the lender’s privilege.

If you are prepared to compare the lenders but are unsure where to start, a personal loan broker may be a handy tool. With many connection services online, you can apply without visiting websites after websites for terms and conditions from the comfort of your own home. However, before you agree on a loan, you will still want to ensure that your loan is lawful.

 

Currency brokers are specialized in helping home buyers find a loan that meets their financial requirements. Often they have the opportunity to compare interest rates, fees, and loan characteristics from different banks and non-bank lenders with various mortgage products. Simply put, brokers can offer you far more options than banks to snap the best deal.

In each stage of the home loan process, brokers will also guide you and regularly review your mortgage to ensure that the rates you receive are still competitive, something banks will not have to do.

Furthermore, the services of a broker are virtually free. In general, they do not charge fees and instead get a commission for signing up for a home loan from lenders.

Getting a home loan bank approaches works for your benefit if you have a good credit history and have a stable financial situation because banks offer clients like you a better rate.

In addition, you may develop a certain level of confidence in how your bank is conducting business and are satisfied with the quality of service it provides if you work with your bank for a long time now. Confidence and satisfaction go a long way, especially when you make a sizeable financial contribution like purchasing a house.

If you choose to follow this path, your bank will assign you a residential credit officer or lender expert. These specialists know the bank’s products and policies extensively and match your mortgage to suit your needs. You can also use a range of package deals on other services of your bank, including credit cards and savings accounts.

If you purchase a mortgage on your bank, repayments should also be simplified as automatic payments can be made from your bank account to your home loan.

Brokers are often commissioned by lenders, as stated above. This can lead to possible interest conflicts, as some home loans are more cost-effective than others.

In qualifications and experience, brokers also differ. However, the vast roster of brokers available sometimes makes it hard to find out which of them has the best credentials to help you.

Banks have their home loan package and can only offer you their products. This means that you have limited options and that another lender may miss a better deal.

In addition, you have the chance to get a home loan approved by a bank dramatically if you are in a unique employment situation, such as an independent worker or a poor history of credit. In such circumstances, you will work better with lenders specialized in mortgages for risky lenders.

The loan usually pays the commissions or fees of the mortgage broker after the loan has been closed, so working with a broker should not influence your loan.

The commission of the broker will vary but typically vary from 0.50% to 2.75%. Federal laws limit charges at 3% and demand that broker charges not be associated with the interest rate.

“The majority of brokers in most scenarios do not charge the borrower at all,” says Weinberg. “The compensation paid by the lender to the broker is not a single penny in closing costs to the borrower, just as the compensation paid to their creators by large banks does not add up the costs of your closing.”

“Consumers did not see how much a broker was paid prior to the (2008) economic downturn, but the current mortgage environment imposes the loan cost on the borrower. The lender’s purchase of the credit is equal to that cost, which means the lender does not incur any costs,”.

Not to say that you must never pay a fee — some brokers charge borrowers to pay them. This is a flat fee, usually from 1 to 2% of the loan principal. You can pay that in a lump sum when your loan is closed or rounded up.

There is no need not to work with a mortgage broker. Those using a mortgage broker benefit from a more personal experience and are given the legacy by a certified professional.

“Working in person and/or with someone your Realtor used in the past and trusts are always a great source,.”

Weinberg notes that the Covid-19 pandemic has an informed ally such as a mortgage broker, which could be more important now.

Weinberg said of the pandemic’s repercussions, “We have seen large banks pull their products back and strengthen their underwriters’ guidelines, in particular on jumbo loans. “Most lenders have, moreover, added overlays to the underwriting directive. These overlays emphasize that an experienced mortgage broker with a broad network of wholesale lenders is important.”

However, it never hurts to shop with a few creditors to see if a broker offers you the best deal. The calculator of the Bank rate mortgage can assist you in comparing offers.

Hypothetical brokers are one of the essential instruments for home-buying, but they can’t be as separate as they appear to be! Mortgage brokers must table food, so understanding how mortgage brokers make money is essential.

The good news is good mortgage brokers, regardless of how they are paid, always work in your best interest. This is partly due to their legal obligation and because mortgage brokers live and die on past clients’ recommendations. For a few more bucks, they would like to get you a lot more than burn bridges.

Here’s all you have to know about the payment of mortgage brokers.

The mortgage suppliers shall pay a mortgage broker via a commission. If a courier connects a borrower to the lender, a percentage of the lending amount will be delivered to the broker by the lender. The borrower usually is not charged directly by mortgage brokers.

Lenders often pay a charge or commission to the broker to sell their products so that you do not pay anything to the broker.

Some brokers receive a standard fee irrespective of the loan recommended. For certain loans, other brokers will be paid a higher fee. The loans a broker recommends to you might affect.

Sometimes, a broker charges a fee directly — rather than the commission of the lender.

If you’re not sure whether you’re getting a good deal, ask around or look online to see what other brokers charge.

The commissions of the mortgage broker vary from bank to individual broker. But the typical range of your mortgage amount could be 0.5% to 1.2%. The exact percentage also depends on the duration and type of loan.

For example, you would receive s$5,000 if your mortgage and broker were paid a 1% commission. The lender pays this amount, so you won’t ever see the bill.

In general, lenders pay an early commission to brokers when a lender signs their mortgage contract, but they can also produce other commissions. For the trailer and the renewal fees, there are two other common commission structures.

Trailer fees: Brokers will be paid overtime while the borrower remains with the borrower. This is usually paid for a lower commission in exchange. Through these fees, brokers are not encouraged to recommend regular lender shifts, which are not always suitable for borrowers.

Renewal fees: When a borrower renews its mortgage with a lender, it is paid to the original broker. Although it could increase the likelihood that a broker recommends renewing your current lender, a broker will also be paid if you continue with a new lender. There is always a good idea to compare your renewal rates, irrespective of how you spend your broker.

Contact Us

Thank you for your message. It has been sent.
There was an error trying to send your message. Please try again later.

Or Call Us: +65 8336 3133

Check out our Help section

About FR Capital

FR Capital is a Singapore consultancy firm that helps SMEs to secure business loans from banks and financial institutions. We concentrate on SME finance, and through our expertise and network, we help clients secure funding with low-interest rates efficiently and hassle-free.