Need to raise funds urgently to kickstart your new business venture, turn your struggling small business around or ease your business’ cash flow problems for the short term? An unsecured business term loan might just be what you’re looking for.
What is an unsecured business term loan?
An unsecured business term loan is a business term loan that does not require the borrower to pledge any collateral such as security or asset (personal or business) against the loan funding. The borrower will then make loan repayments over the agreed loan tenure via installments. This makes it very similar to how personal loans and student loans function.
So, is an unsecured business term loan collateral-free? The short answer is yes, but for some bank loans, you may need a loan guarantor to support the loan. That’s because business loans are generally on the larger side since they’re for enterprises rather than individuals after all.
Benefits of an unsecured business term loan
Unsecured business term loans are highly attractive to small and medium-sized enterprises (SMEs) that are looking to raise working capital. As it is highly flexible, an unsecured business term loan can be used for anything business related, from easing cash flow and expanding operations, to increasing inventory and headcount, or even upgrading the equipment used at work.
An unsecured business term loan is attainable for many businesses and you can get full disbursement of funds once your loan is approved. This is a huge perk for businesses that need to raise urgent capital within a short period. Nifty, huh?
Who can apply?
Different unsecured business term loans have different qualifying criteria. For example, one bank may offer non-government-backed loans to businesses that are locally incorporated for at least two years and have at least 30% ownership by Singaporeans/Singapore PRs while another bank may require businesses to be locally incorporated for a minimum of three years, have a minimum turnover of S$750,000 and at least 50% local shareholding.
Legalised money lenders in Singapore may offer unsecured business term loans to businesses as long as they are registered with ACRA, have been in operation for the past 12 months, and have a director who is a Singaporean/Singapore PR, or a foreigner residing in Singapore.
As you can see, the hurdle for companies to obtain an unsecured business term loan from licensed money lenders is much lower when compared with banks.
Where can you get an unsecured business term loan in Singapore?
All licensed money lenders, major banks (e.g. DBS, UOB, OCBC, Standard Chartered Bank) and financial institutions (e.g. Hong Leong Finance, Singapura Finance) in Singapore offer unsecured business term loans to business owners.
When you’re out searching for a loan, remember to take the time to research and compare. The extra legwork that you put in will be worth the money that you save. Given the plethora of unsecured business term loan options that are available for companies in Singapore, you’re never stuck with terms that aren’t in your favour.
Loan providers with start-up business loans are endless, just ensure you find the right lender that meets your needs best
How can you boost your chances of getting your loan approved?
Regardless of whether you are looking to borrow from banks, financial institutions, or licensed money lenders, having a spotless credit report will help improve your chances of getting your loan approved. This is why you need to make it a point to pay your credit card bills and loans on time consistently.
Your earning and loan repayment capacity will also be taken into consideration.
With banks, your credit score may affect your loan approval even if you’re applying for a business loan for your company.
When you apply for a loan with licensed money lenders, they will need to submit all relevant information to the Moneylenders Credit Bureau (MLCB). The bureau will then perform a quick check on your borrowing limit, existing outstanding loan principal amount with other money lenders, total payable amount, repayment records, and other important pieces of information.
When it comes to unsecured business term loans, having a proven financial track record will help increase your chances of getting your loan approved — this means ensuring sustainability and healthy cashflow for your business.
How to apply for an unsecured business term loan with a licensed money lender in Singapore
The best thing about borrowing from a licensed money lender in Singapore is that the loan application process is a lot easier and faster than at a bank or financial institution. You can get the loan approved in as fast as one week!
Here are the steps to apply:
- Call in or submit an online enquiry to schedule an appointment with the licensed moneylender. Alternatively, you may walk into their office with the required documents listed below.
- After you fill out the loan application form, the loan officer will have a short interview with you.
- Your loan application may be approved on the spot after they review all the supporting documents or within the next one to two business days.
- After loan approval, the funds will be disbursed to you immediately by cash or bank transfer.
The best part is, you can apply for your loan online anywhere, anytime. That’s because there are 24 hour money lenders in Singapore that offer online loan applications 24/7 — though, getting loan approval still requires a green light in-person for in-person verification, to check a borrower’s eligibility, and go through the loan contract. Talk about convenience.
Key documents required:
- Last six months’ bank statements
- Last two years’ financial statements
- Company Constitution
- Major shareholders’ and directors’ ICs and NOA
- Major shareholders’ and directors’ credit reports from Credit Bureau Singapore
- Company’s BizFile
- Tenancy agreement
What are the interest rates, fees, and charges with licensed money lenders?
Licensed money lenders in Singapore typically charge an interest rate that ranges from 1%-4% per month, and the maximum chargeable interest rate is 4%. Additionally, a late repayment fee of up to S$60 applies for each month of late repayment.
Whether you’re borrowing from banks or licensed money lenders, it pays to repay your loans on time. Even if your business is just getting off its feet, proper budgeting and management of finances go a long way.
How do you apply for an unsecured business term loan with MM Credit?
MM Credit is a licensed Bedok money lender that makes the loan application process seamless, quick, and easy for anyone and everyone, including you. All it takes to start the ball rolling is to give us a call or fill in the Online Loan Form and our loan specialist will get back to you with a personalised quote.
About the Author
As a premier professional lender that is focused on assisting customers with their unique loan needs since 2010, MM Credit regularly dishes out well-crafted content on loans and personal finance.
