When to Use a Business Loan for Growth, and When Should You Wait?

1. When to Use a Business Loan for Growth, and When Should You Wait? While business growth is a very exciting milestone, it comes with a lot of new expenses. With higher revenue, comes higher responsibility. Every successful business must strive towards growing, but that’s also why you should be aware of the concept on a business loan. Many owners consider taking a loan when they find themselves in this situation. But, is it always the right time for a loan? Did you carefully consider the business loan interest rate? What are some of the other things that you might want to take into consideration? A Business Loan for Growth A business loan in Singapore, as any loan, is a sum of money that you are borrowing (and paying back in a certain period of time, plus the interest rate); but it’s specially designed for businesses. Growing your business requires investing some money; money that you don’t always have, and that’s why you might need this kind of loan. You might need the funds for various reasons, but some of the things you might want to do if you want to grow your business are: •Buy more equipment •Expand to a new location •Hire new employees (or train the ones you have) •Increase inventory (introduce a new product category) •Entering a new market If you are timing taking your loan well, it can really help with boosting the business’s growth. But, you must always remember that borrowing comes with the responsibility of paying the loan back. You must be aware of business loan interest rate, and when is it a good time to get

2. a loan. Not to worry, the information is now here! But, let’s see if a business loan in Singapore is a good idea for you! Business Loan Interest Rate In Singapore, a business loan interest rate can differ based on a series of elements, like: type of loan, the amount you borrowed, repayment term, credit score, and other similar things. There are a few types of business loans in Singapore, and depending on the one you are getting, the interest rate could be lower or higher. Just to name a few of the most common types: unsecured business term loan (with an interest rate of around 6% to 12%), an equipment financing loan (with an interest rate of 3% to 7%), and a SME working capital loan (which typically has an interest rate fluctuating between 2.5% and 4.5%). Of course that the business loan interest rate, and other details about the loan, must be discussed with the lender; because numbers can differ from one lender to another. A collateral, your age, and the industry you are in might also influence the interest rate. But, there is no need to despair, just gather all of the information you need, and contact the lender you have in mind. You should compare lenders before committing to one; just to make sure that you are getting the best deal! But, now, let’s get into the more fun stuff. Signs that You Should Take a Loan As previously mentioned, if you want to take a loan in order to grow your business, it must be timed well. Now, let’s look at some of the signs that tell you that it might be the right time for you! If you are having a predictable and strong cash flow, that’s your first sign. Lenders will be more willing to work with you if you have a steady cash flow; and you know that you will be able to pay back the loan. You have clear plans! If you know exactly what you need to purchase, and why. As an example, you want to add an ice cream machine, because ever since you opened the shop, people have been asking for ice cream daily. Therefore, you know that this investment will bring a lot of money back. A once in a lifetime opportunity is definitely a sign. If you have the chance to buy a competitor’s location, or maybe there is a seasonal demand that you can see it will bring money; you should go for it! Opportunities don’t come and wait; you must take them as they pass by you. That’s why you must always be ready, and know that if you see an opportunity, you can grab it before anyone else. If your business credit is strong, that’s another good sign that you might use a loan for growth. And last but not least, if everything is going smoothly with the business, it might be another sign.

3. Signs that You Shouldn’t Take a Loan The first and most important sign, is that your revenue is declining. What you must know, is that this type of loan can help you improve, not fix. If your business is already not running efficiently, you should not risk anything by buying new machines or hiring new people. If you are not sure how you will use the loan, you should not even apply! A loan should have a specific direction, you should know exactly where every cent will go. If you take a loan just ‘to have the money’, you will probably end up in debt. Tied to another one of the signs, but not having a plan is a sign. Before taking a loan, you should have a strategic plan. You should have an analysis of the performance of the business today, and the what could potentially happen if you would take a loan. In order to be able to make this potential plan, you must know what you will be buying. As with the ice cream example, you can make an approximate plan of how the business will work after buying it. And, another one that you might one to know, is that if your personal credit score is poor; you should first work on improving that. Conclusion With all of the information you learnt about business loan interest rate, you can now make an educated decision! Paying attention to all of the signs that were mentioned, can help you not get into debt, and actually growing your business. The growth of a business is not a thing that happens overnight, and it requires all kinds of resources; that’s why you must make sure to use your resources wisely.