Common misconceptions about business loans in Singapore
1.Businesses should only apply for loans when they have no money
A common misconception is that businesses should only apply for a loan when they do not have enough money.
When they have sufficient finances, businesses do not apply for loans since they do not require it at the current moment.
Businesses should plan ahead and prepare for the future when they do require a loan.
When they have a good financial status, it is the BEST time for them to apply for a loan because they would stand a better chance to have their loan approved.
This is because their credit standing and financial status is stronger at that moment.
Conversely, when businesses have a poor financial status, banks and financial institutions would be less likely to approve the business loan since financial status is weak.
In a nutshell
Businesses should apply for loans when they have a good financial status and NOT when they lack cash.
2. Apply loans at every bank possible
Another misconception is to apply to many different banks for loans at the same time to increase their chances of getting at least one loan.
This stems from the common saying, “Don’t Put All your Eggs in One Basket”.
Many businesses believe that placing their bets in different banks when they are in need to get a loan is a right move.
In fact, it is the wrong move!
Business should not apply for many loans from many banks at the same time because this would tarnish their personal credit bureau record by increasing the number of searches whilst also increasing the search count for their ACRA for their Company.
Therefore, business owner should also take precedence to the number of loan they should be applying at one time as it makes them look desperate when there are too many searches on acra on the same month for instance. In addition, having too many searches on their credit bureau report will also bring down the credit bureau score of the person being search for.
In a nutshell
A great way to apply is to apply in a gradual manner to avoid the dropping of credit bureau score.
For instance, applying to two banks, then followed by two to three banks again after some time. This would be the accurate and more efficient way to apply for bank loans.
3.Avoid the use of credit cards
it is not unheard of that people would say, “Don’t get personal loans”, “Don’t get any credit card or loan is bad and you shouldn’t be taking any loan. “All of the above are the common saying that many parents have taught their kids when they are young.
Therefore, in many times, some business owners avoid the use of credit cards all together and do not have a single credit card in their lifetime.
Without personal use of credit cards, personal loan, housing loan or any banking facilities; there will be no credit record in your personal credit bureau.
Lacking credit records means that there is no credit history for banks and financial institutions to analyse your personal credit profile, which will affect your credit rating. This give the banks a lot of uncertainties when they are deciding if they should trust you.
This deters banks and financial institutions from approving future loan applications for your business as they do not have any historical record of you to gauge how is your payment conduct and how you behave.
In a nutshell
The best way to go about is to hold a few credit cards, utilize it and pay on time. This will build your credit record and allowing the bank to see that you are a good paymaster. Therefore, increasing chances of getting a business loan approval.
4.Get confused about the roles of loan brokers with that of loan consultants
The last misconception when businesses are in the process of getting a business loan is that they might confuse the role of loan brokers with that of loan consultants.
Loan brokers are typically intermediaries which focuses only on passing documents straight from clients to the bank or financial institution.
On the other hand, loan consultants give advice and provide consultation services before facilitating the deal.
As an advisor to the deal, loan consultants help improve and value-add to the loan application. They also seek to increase the chances of the approval of an application by advising the client on the right thing when applying for a loan. A good consultant will also help analyse and improve their business along the way.
In a nutshell
Businesses seeking advice on how to increase their chance of loan approval and improve their business should approach loan consultants as a good consultant can truly value-add the business in long-run.
5.Looking for a Loan Consultant? Choose Bizsquare now!
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Without a doubt, we fight for you and your business needs. We seek to add value to your business and rest assured we would not charge fees if we do not add any value to your business.
By practising a Business Credit Doctor concept, we strive on being your specialist by conducting a full credit check on your business to analyse where your problem is; and we provide recommendations and also able to solve it for you.
In addition, customisation is one of our expertise and we ensure to cater to your needs. Bizsquare also ensure not to over-promise. You can count on us to give our honest and genuine opinion on your current financial situation and what you should be doing to get your desired loan.
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