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How To Increase Chances Of Securing A Commercial Property Loan In Singapore

Having your commercial property loan applications denied can be demoralizing, frustrating, and at times, even infuriating. For first timers, it might also be a daunting process in applying for a commercial property loan in Singapore.

While there would undoubtedly be a variety of different factors for eligibility assessments used across various banks in assessing and determining the application and approval of your commercial property loan in Singapore, fortunately, the simple answer to the question is still Yes! You can certainly increase your chances in securing a commercial property loan for your business in Singapore. 

Increase chances of securing a commercial property loan in Singapore:

Regardless of you having faced constant rejections in commercial property loan applications or whether if it is your first application, fret not! Here are three useful tips on how you can potentially improve your chances in securing that coveted commercial property loan:

1) Ensure that your company is consistently in good financial health, or strive towards it

For your business, it is highly advisable to have sufficient cashflow and be in a healthy financial position (as assessed by the respective banks processing your loan application) to have the ability to service loan repayments and maintain a good liquidity ratio, which would impact both your company credit rating and its credibility. If your company is in a healthy financial position, it would serve to lower its risk level when evaluated by the respective banks and in turn, face higher chances of securing their commercial property loan in Singapore.

However, if you are an individual who is setting up the business as a sole proprietor to purchase properties in Singapore for reasons such as investments etc. and is looking into applying for a property loan, the Total Debt Servicing Ratio (TDSR) framework would apply to you, and it must not exceed 60%. The Total Debt Servicing Ratio (TDSR) can be easily tabulated through dividing your total monthly debt repayments (including personal loans, car loans, as well as the monthly repayments required for your loan application) by your monthly income.

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2) Do not neglect personal finances

It is not surprising that banks would examine the personal credit ratings of the business’ founder(s) along with the involved partners or co-founders (if any). Thus, if all the individuals involved in the creation/establishment of your business is deemed to have good credit scores and clean credit histories (no defaults or foreclosures etc.), it would positively contribute towards the company gaining a better opportunity in securing its commercial property loan in Singapore. All involved individuals – founder, co-founder, partners – in your business must always strive to maintain a good credit score and avoid anything that could possibly jeopardise their credit score, and in turn, negatively affect the credibility and assessed risk-level of your business.

You can request for your CBS Credit report for a fee of $6.42 (inclusive of GST) at the Credit Bureau office, CrimsonLogic Service Bureaus or at any of the SingPost branches.

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3) Thoroughly understand your property’s value and have a detailed business plan.

While banks may offer to carry out their own property valuation, it would be beneficial to present your own valuation of the property as well to display your determination, sincerity and perhaps, your unwavering belief in your business potential. In addition, if applicable, understanding the prevailing trends and conditions in your current business industry along with having a comprehensive business plan which details the size and type of property, how would the property be utilized, and its projected financial returns etc. would also undeniably help in your presentation towards the banks and better convince them in processing your application for a commercial property loan in Singapore.

We hope that these 3 tips are useful in providing you with valuable insights and our experienced consultants here at BizSquare will always be around to provide you with further professional advice and assist you in securing the commercial property loan you desire.

BizSquare is a one-stop business consultancy firm providing Loan Consultancy Services, Accounting and Corporate Secretarial Services, Branding and Marketing Consultancy, Strategy Management and Start-up Mentorship.

For more info, please visit Bizsquare Group at www.bizsquare.com.sg 

About Author

Jayce Tang

Jayce is a digital marketing intern at Bizsquare Management Consultants Pte Ltd. He loves driving and in his free time, he enjoys hanging out with his friends and family.