Have you ever wondered why people need a business loan? Here are the big fat reasons. Check it out. You might need one too.
Small business entrepreneurs in Singapore apply for loans for various reasons. But, it will always be towards expansion. Of course, a business owner wants to drive his or her enterprise ahead of its competitors in the industry. Unfortunately, it is easy to slip into a financial crisis if an entrepreneur does not know how to use the business loan strategically.
Here are how you can and the reasons you need a business loan.
There is no place for a successful small business but to go up and do this. But, first, you have to expand your enterprise. However, how would you know if you are ready to expand?
Expansion can only be successful if your enterprise turns in a consistent flow of profit and a positive cash flow. With these, you can predict a positive number of returns in the future. Once you have laid out your expansion plans, you can start your application for a business loan.
There are various ways to acquire the equipment you need for your business. So it is regardless of whether a startup or a thriving small one. In addition, you can either lease it or buy it outright. So why would you choose to purchase the equipment with a business loan?
Your equipment can be tax-deductible for the first year you have acquired it. Also, you can buy it, use out its useful life. Then, afterwards, sell it at a functional level. So take care of your equipment, may it be machinery, IT equipment or a tool for your service/goods. Later on, use it as collateral for future loans.
If your business is a seasonal enterprise, you will need some cash. Therefore, it is essential in buying your products way ahead of the season.
You need a business loan to purchase a large amount of its inventory. It makes you ready and kicks start when the season comes for it to sell. Also, you don’t have to pay for the loan outright. Instead, you can arrange for the loans to be paid after the seasonal sales with flexible terms.
You will have to keep up with the surge of demands with a business. Also, you have to purchase goods in larger amounts with high quality. So yes, it could be risky. But since you are buying more than you used to, the return on investments is unsure. Fortunately, many licensed moneylenders will be willing to give a hand more than a bank can.
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Working capital is the cash you use to continue your daily operations. Unfortunately, when a business starts, its profit is not yet enough. Therefore, you need to keep the gears rolling each day consistently.
Also, you can use the loan to manage daily operations. It aids to consistently best quality products and services until it is already making enough to keep it afloat. Banks usually offer special working capital loans. But it comes with higher interest rates because this tends to be riskier. However, licensed private moneylenders can offer more flexible terms.
It is common for moneylenders to give perks to their loyal customers. Some waive processing payments. Others provide a lower interest rate. Meanwhile, some do not require much paper works anymore. For this reason, it is sound to create short-term loans to build credible credit for your business. Make sure that you regularly pay on time.
The best part is when you are ready for a bigger loan from a specific Singapore moneylender you always partner with. Then, you can easily have it without much fuss. Also, you have gained a good credit score along the way.
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Opportunities will usually knock at your door once while being in the business. You have to weigh it if it is too good to pass up that it outweighs the risk of loss. For example, you might have a chance to buy a bulk of inventory at a discount. Or you found a great place to expand your business at a lower price yet offered with limited time.
Here is a scenario. You acquired a contract for $20,000. Yet, you do not have the equipment to meet the job that costs $5,000. Then, you can consider a two-year loan with $1000 interest. Your profit will be $14,000. But, it outweighs the debt and then goes for the loan.
Don’t jump to any concluded calculations. Make sure you are not overestimating the actual costs of profits. List down the pros, cons and elements which can affect your forecast.
If the business is booming and expanding, you don’t need to expand your place. Instead, you need to add some staff to do the jobs that weigh on you. These are bookkeeping, marketing and customer service.
Make sure that your team is not doing too much. So it can handle all the functions efficiently. It is better to loan for getting a fresh talent rather than risking the quality of your products and services.
An extra set of hands won’t hurt, too. It will help your focus on delivering the demands with high-quality customer service.
Whatever your reason you need a business loan, you have to picture the factors and risks. Then, tally all the costs and the promising revenue. Afterwards, you can take a loan you are confident you can repay. And if you are looking for a business loan, choose Cash Mart. It is the leading licensed money lender which offers a flexible loan that can easily fit your needs.
Do not hesitate to drop by or give it a call. The friendly Cash Mart staff will be willing to walk you through your options, loan processing, and cash disbursement.