If you already have a business or are in the process of starting one, you may have already made the determination that you require additional financial assistance. It’s possible that you could get a loan from someone you know. For small businesses, however, there are several different types of business loans available, depending on factors like:
- for what purpose and how much money are you looking for?
- short-term or long-term needs, the stage of your business
- your credit record, and credit score
Loans for Small and Medium-Sized Enterprises
A Mortgage Loan
You can get money by pledging an immovable asset, like a house or commercial property, as collateral to the lender in the form of a mortgage loan. The lender holds the asset until the loan is repaid. Check mortgage loan comparison Singapore before finalizing.
Line of Credit
When a borrower has a line of credit, they can access the funds whenever needed, as long as they stay within their credit limit. Like a credit card, the credit limit will be restored to its original value once the outstanding balance has been paid in full. Fixed or revolving lines of credit are available.
Advantages
- To cover unanticipated costs or in times of crisis
- Protect against seasonal shortages of funds.
- Making ends meet while waiting for customers to settle their accounts
Loans for Heavy Equipment
This loan is pointless if your company doesn’t have an immediate need for equipment or vehicles. Because of the low-interest rates, this type of loan can be very useful if your business’s credit, finance, and age are in good shape.
Invoice Financing
B2B businesses are increasingly turning to invoice financing, a relatively new form. The lender can provide you with a cash advance by using your outstanding invoices as collateral. Most b2c businesses, or those that don’t invoice customers, won’t be able to take advantage of this type of loan. Invoice financing allows you to receive a portion of your total invoice amount (80%) from the lender while keeping the rest for yourself. You can use the advance to pay for expenses while waiting for your customers to pay. The lender will charge a weekly fee. The lender will return the remaining 20% once your customer has paid.
Credit Cards for Business
Many people prefer to use credit cards for personal purchases rather than business purchases. However, business credit cards can be affordable if you need to borrow money quickly to cover expenses.
- Cashback
- Rewards points
- Zero percent introductory interest rates
- Rental car insurance, travel insurance, and so forth.
Loans to Stay Away from for Small and Medium-Sized Businesses
- Term Loans from the Bank
- Payday Loans for Merchants
Which SME loan is the Best?
It all comes down to your company’s financial situation, credit rating, and the purpose for which you need the money. You’ll need to weigh the pros and cons of various loan options before deciding which one is best for your business.
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