Short term business loans offer many benefits, whether it’s financial breathing room to manage cash flow, cover unexpected expenses, or if you need to invest in a new venture. These short term loans are usually easy to manage and will not spell a long term liability for your operations.
In Singapore, both banks and private lenders offer short term business loans. When looking at private lenders, several different groups exist, one of them–and the focus of this article–being licensed moneylenders.
As you may or may not already know, money lenders are establishments that generate profits by charging interests on loans offered to the public. In Singapore, they are controlled and regulated by the Ministry of Law. Which means, only moneylenders which are licensed under the Ministry may conduct business here.
The ministry holds these private moneylenders to a strict set of regulations and monitors their conduct. For instance, money lenders are not allowed to solicit loans via text messages, phone calls or social media platforms. There are also limits to the amount they can offer each borrower, which has been enforced to minimise the effects of irresponsible financial habits.
Licensed moneylenders usually offer personal loans, but a handful of them also offer business loans to SMEs. These loans can take the form of term loans, bridging loans, invoice financing, and purchase order financing, to name a few.
Short term loans are among the most common types of business loans offered by licensed money lenders. These loans are unsecured and have to be repaid within a relatively short period of time, usually less than a year or two.
Many business owners may have some reservations about taking loans from moneylenders, not least because of the many negative news reports regarding the behaviour of debt collectors. However, licensed moneylenders in Singapore operate under strict codes of ethics, and offer several benefits that give them an edge over other lending institutions. Here are the positive points for considering moneylenders:
Private moneylenders offer you the convenience of online applications, many of which can be completed using your Singpass Myinfo details. This saves you time and effort, as the required documents may also be submitted online. Online applications also mean that you are not bound by office hours, and can fill in the required information at your own convenience. This allows you to focus on essential business activities, rather than taking up your precious time during a busy work day.
Unlike larger financial institutions like banks, private moneylenders do not subject borrowers to highly stringent requirements. As smaller lenders, they often have their own requirements which tend to be more flexible and lenient compared to banks, especially when it comes to credit-worthiness. This means that borrowers who may not meet a bank’s approval standards may be able to secure loans from these licensed money lenders.
Moneylenders in general are smaller financial institutions, and therefore do not have complex organisational structures. As such, your application can be processed much faster, with less layers of bureaucracy needed. Some moneylenders can even process your application and provide you with a contract within one business day.
Once you have agreed and signed the necessary paperwork, moneylenders are also able to disburse your funds in a fuss-free manner within a relatively short period, usually within 48 hours or less. This prompt processing by moneylenders provides a level of convenience for business owners who may need funds in an urgent manner.
Moneylenders also tend to offer more flexibility to borrowers in the aspect of loan repayments. As a borrower, you may choose to repay your short-term loan over a 3 month to 12 month period, or longer. Moneylenders also tend to be less rigid when it comes to repayment tenors,
If you have an outstanding credit record or proof of income, you may also be offered more favourable terms by a moneylender. In short, their conditions can be negotiated more easily with money lenders than with larger financial institutions like banks.
The Ministry of Law has capped monthly interest rates charged by money lenders at 4% per month. Should you have a good reputation as a borrower, you may negotiate with your lender for more favourable interest rates. This singular aspect makes borrowing from moneylenders compelling: they are more flexible and can compromise with borrowers at a negotiating table.
For illustration, if you borrow $10,000 over 3 months, your total cost would be about 19% (inclusive of 10% processing fee). Which is less than $1,900. And if your profit margin is 30% and above, this might still be a worthwhile source of funds.
You can save time and effort by reaching out to Lendingpot. Our business loan platform allows you to receive multiple offers from private lenders, with their terms and conditions listed. Compare interest rates within minutes, and choose the loan provider that best suits your needs. All this comes with just one sign-up step, made even easier when you use your Singpass Myinfo.
Contrary to popular belief, legitimate moneylenders all conduct their businesses in an above-board manner. You do not need to be afraid of any hidden fees or charges, as these are regulated by the Ministry of Law and clearly stated in your loan contract.
These legal moneylenders are also required by law to meet with you in person at their registered premise of business, and explain the contract in a language you can understand before any signatures are put on paper.
To their credit, the licensed moneylenders in Singapore have generally been exemplary in their behaviour, filling in the necessary financing gaps required by SME businesses to function and thrive. Each one of our partners are licensed moneylenders and with just one application, you can access a plethora of loan offers suited to your unique needs and circumstances.
Alternatively, you may contact us to learn more about the various business loan options available to your business. We are here to guide you through the process and equip you with the financing you need to continue growing.
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.
