In today’s business landscape, loans play a vital role in helping companies grow and expand their operations. From providing the necessary capital to invest in new projects, to upgrading technology to adapt and innovate, they serve as a critical tool for sustainability and development.
With that being said, sifting through the plethora of loan companies and their associated loan options can be a little tricky, to say nothing of reputation, given the prevalence of predatory loan practices.
Lendingpot was born out of a mission to simplify and create transparency in the loan industry. So we thought it would be helpful to share a few insights on what separates a good loans company from a bad one.
As any loan expert will tell you, before signing on that dotted line, it’s essential that you understand the terms and conditions of a loan. Doing so will clue in on your financial obligations, hidden fees and penalties, as well as any legal implications that come with the loan.
Bad lenders make this difficult, burying critical information in legalese and obfuscating key details. This is why the first tip we’d recommend is to look for a lender that is transparent and upfront about details like interest rates, repayment schedules, penalties, and miscellaneous fees. Loan comparison platforms like Lendingpot, where every aspect of the loan is clear and laid out, can help you steer clear of the worst offenders.
Read more: Mistakes to Avoid when Applying for a Corporate Loan in SG
The loan market is awash with various loan options, most of which are designed for specific use cases. Need to purchase new equipment or machinery? Equipment financing loans can be helpful. What about financing day to day operations? Working capital loans can help alleviate cash flow problems during slow periods.
However, despite the availability of these purpose-specific loans, individual circumstances vary: what might be suitable for one business might not be ideal for another.
Good lenders are often willing to cater to your unique situations, going as far as providing flexible repayment options, offering adjustments in loan terms, and customising packages to better align with your financial capacity and goals.
Read more: How to Get Small Business Loans with No Credit or Collateral
No industry is exempt from certain aspects that one may deem as less favourable, or unethical. The same goes for the loan industry, ranging from aggressive collection practices to predatory loan terms—most of which are perpetuated by criminal elements.
Look for lenders with a proven track record of ethical conduct and customer satisfaction. Positive online reviews, industry accreditations, and a transparent complaints process are all indicators of a company that prioritises building long-term relationships with its borrowers. Loan marketplaces such as Lendingpot are good places to look due to the strict criteria required for companies to list their loan services.
The first and, arguably, most important step to take before reaching out to a loan company is to check and confirm their credentials. The easiest way to do so is to ensure that the loan company is registered and licensed by the Monetary Authority of Singapore. Licensed loan companies are required to work within a framework of regulations that are designed to protect consumers from unfair practices.
Loan comparison platforms like Lendingpot are another useful resource: each of our loan partners, from moneylenders to banks, are registered and licensed to operate within the country.
You’ll also want to familiarise yourself with the Moneylenders Act. This is legislation designed to regulate moneylenders and preserve consumer interests. This act outlines various consumer protections that you can consult to recognise and avoid predatory lending practices.
Choosing between a good loan and a bad one can have major implications for your financial health and stability. By paying close attention to the aforementioned factors, you can safeguard your business against potential pitfalls.
If you wish to consult an expert before taking that next, crucial step, our financial experts can help you make an informed decision. Alternatively, you can leverage our loan platform to explore available loan products from more than 45 banks, non-bank financial institutions, peer-to-peer lenders, private lenders and family offices in Singapore.
Lina heads up all things marketing and branding at Lendingpot. With a keen aesthetic eye, she believes in the use of design to communicate with our SME community and aspires to turn Lendingpot into a household name. Out of work, she is an avid camper and appreciator of nature’s best works.
