One of the key elements in running a successful business is undeniably money. Even the greatest business idea gets nowhere without the necessary start-up funds. In a business that is already up and running, money is also essential to support growth and scaling. From marketing to staff and even to materials. It all requires funding.
There are many loans in Singapore to support SMEs to grow, from banks to government grants. It may seem intimidating to take up an extra liability for your business but there surely are advantages to taking a loan.
Make the most out of business opportunities
A business opportunity arises. You need to fulfill the order. You need that heavy upfront investment for equipment, property, staff or even materials. Sure, you can rely solely on your cash flow and wait until you have enough profit. But doesn’t that take time? Can you really afford to wait?
With a business loan, you get your hands on the extra funds almost instantly. Striking while the iron is hot is vital in growing a business. Loans applications can be done in under 5 mins (via Singpass MyInfo) and some only take one business day for approval. You do not want to lose out to your competitors. More business equates to more profit. And if you can meet your client’s order, you gain credibility. Word of mouth will surely get out there!
To top it off, with the upgraded and improved equipment from the extra funding, your operational efficiency will surely improve too. Two birds with one stone, huh!
Strengthen Your Creditworthiness
Let’s say you are doing well, making good profits. You don’t see the need for any extra funding. Well, this might actually be the right time for you to get one!
You are in a good financial place. Monthly repayment wouldn’t be an issue for you. As you do so, you build yourself a great track record for your creditworthiness.
It may not seem important, but this matters when you do need the funding someday. You’d already be familiar with the process of applying for loans and thus, any unnecessary delays are avoided. The bank will also be more confident in your ability to repay the loan and as a cherry on top of the cake, a borrower with greater creditworthiness is likely to be given lower interest rates!
Keep Control of Your Business
We’re sure you are familiar with the TV show “Shark Tank”. You can find investors for your business to raise funds. But as depicted in the show, you must give up a piece of your business in the form of equity.
Yes, sure. You don’t have to pay an interest rate with an investor on board. However, you will be held accountable for how the money is spent and you will be pressured to ensure the money they put in grows. On the other hand, with a loan, there is no change to the equity structure in your business and how much of the company you own. You are still your own boss!
All in all, taking up a loan for your business might just do more good than bad. It ensures your business is set for success and growth. Although repaying the principal, as well as the interest, seems like a liability, think of it as an investment. The funds might just enable you to make more profit at a later stage.
And just maybe, with the extra funding, your SME can grow to be the next multinational million-dollar cooperation!
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