Business loan is an amount of money that is borrowed by a company for the whole and sole purpose of upgrading the business or something related to the business. Now, this amount of money needs to be returned along with interest by the borrower within a certain discussed period.
Now, any bank wouldn’t just hand you the sum of money you need just like that. There are a few criteria that you need to fulfill to be able to qualify for a business loan.
So, what are these criteria?
How to Qualify for Business Loan
Just as it has been mentioned above that there are few criteria that one needs to fulfill to be eligible for a business loan. Well, here are what you need to have.
Good Credit Score
This is the first criteria when it comes to getting your sme loan singapore to get approved. At any bank you go to for a loan, the first thing they will check is how good your credit score is!
So, what’s the importance of a credit score? Well, by looking at a credit a bank or an institutional lender checks their chances of getting the money back. So, if you have a good credit score then it would be quite easy for you to get the loan.
If you want you can also check your credit score by purchasing it from Credit Bureau Singapore. This way you will have a general idea about how good your credit score is if its AA or BB then you would get it quite easily.
On the other hand, if you don’t have a good credit score i.e. if it’s CC or below, that wouldn’t mean that you won’t be able to get the loan. The bank will just request you for a collateral or a guarantor for the loan.
So, right after your credit score, banks check the annual revenue generated by your business. So, what does your annual revenue have to do with your SME Loan Singapore? Well, it has everything to do with that. Let’s take the example of making it easier for you.
Suppose that someone has asked you to lend them a big amount of cash and you also happen to know that a certain person has a low monthly income. So, will you be willing to take the risk of lending that amount of money despite knowing the fact he won’t be able to pay you?
No, right? Well, the same goes for banks as well. Most banks prefer businesses that generate more than S$300,000 of revenue annually. But this criterion is different for all banks, there are some banks or institutional lenders for whom this amount is a lot less. Capitall SG is one of those whose annual revenue limit is very low.
Duration of Business
It is a fact that most of the new business doesn’t cross the 1-year threshold. So, any bank would be skeptical about loaning out a huge chunk of money who is quite new to the business. So, from the perspective of an institutional lender, any business that has been running for an extended period is stable. In short, the more the number of years you have been operating, the more stable your business is.
Generally, banks prefer that business has run for about 2 years or so. And if your business has been up and running for 2 years or more, there are certain perks to it as well. You can get larger loan amounts and that too at very low-interest rates.
Now, on the other hand, it doesn’t mean that businesses that are new to the game won’t be able to procure any loans from any banks or whatsoever. Well, they too are quite eligible for business loans but from different sources. The government has a few grants and schemes that will lend you a helping hand if your business has been running for less than 2 years.
Well, these are the major criteria that you need to fulfill to qualify for a business loan. If you are someone who’s not able to fulfill these criteria, then worry not, as there are other options for you as well. Capitall SG is one of the reputed institutional lenders and you can contact them if you happen to not fulfill any of these criteria. Hopefully, the information provided here has been beneficial to you.