Almost every business will need an injection of cash at some point in their business cycle. That’s why using the right form of financing such as cash loans in Singapore is crucial to reducing costs while also providing significant benefits for the business. Of course, all loans must be entirely legal and comply fully with the legislation in place in Singapore, which is designed to protect both borrowers and lenders.
When Do Businesses Require Loans?
Businesses can require loans for various reasons and at different stages within the business lifecycle. They can be used to meet both long-term and short-term needs and often provide a much-needed source of capital. Here are four common reasons why a business may require a loan.
1. Business Setup
When any company is established, a significant sum of money will be required. More often than not, a certain percentage of this capital will come in the form of a loan. It may be used to purchase machinery, stock or even to provide working capital while the business becomes fully established.
2. Expansion of Business
As businesses grow and evolve, the owners and management often see the need for expansion so that the company can meet its potential or fulfil orders. It could involve a move to new premises or replace and improve existing machinery. Most organisations don’t have the available funds to pay for this outright so again, are likely to seek loans.
3. Capital Expenditure
Even if you aren’t planning to expand your business, replacing equipment in both standard and costly. While the company may be able to pay for this out of their bank balance, often choosing legal loans is more beneficial.
4. Ease Cash Flow
Many businesses require short-term loans or lines of credit to ease cash flow. It is a common practice in most companies and if used correctly, is a practical and sensible form of financing.
How Can My Business Obtain Credit?
Organisations can obtain credit from a range of different sources, including banks and authorised money lenders. Some forms of credit include:
1. Business Line of Credit (LOC)
Businesses can obtain LOC from banks, money lenders or even suppliers. They are a fixed amount of credit that is available for a given period. The entire LOC is rarely used and can be paid off and used again as required.
2. A Business Loan
A business loan is a fixed amount of money that is borrowed for a fixed term at a specific rate of interest. Business loans are commonly used for the purchase of substantial fixed assets and are included in the balance sheet.
3. Governing Funding
Government funding can come in the form of grants, incentives or even loans. Several government loans are available to businesses in Singapore, operating across a range of different sectors.
Here at Fast Money, we provide a range of loans, including business loans and lines of credit. We also offer an extensive array of loans for individuals. A member of our team will be able to discuss the options available to you and your business at (+65) 62244746 (Yishun) and (+65) 62244749 (Tampines). If you would like to read other articles similar to this, do check out our blog page!