More than 70% of businesses require loans for start-up, however, 80% or more do not survive the first three years, especially in Singapore. Some of the reasons for this alarming statistics are listed here in case you’re planning of acquiring a loan. Maybe you might have a re-think.
What to consider before acquiring a loan
1. Interest Rate
You wouldn’t dare to go for a loan with higher interest rate no matter the need for urgency. Interest rate in Singapore is as high of 20%. Even if it’s a multi-million dollar investment, as a business owner who wishes to stay in business on a long term basis, the risk of higher interest rate can ruin your business especially when you are hit by unforeseen circumstances such as foreign exchange rate.
2. Variable Assets as against fixed Assets
Perhaps, one major concern for business owners who acquire loan in Singapore and are unable to pay, is the amount spent on variable costs. For instance, such as, electricity bills, gas, and serviceable products. As an Entrepreneur willing to grow his business, you need to acknowledge the fact that whenever your variable asset outweighs your fixed asset, you will be force to source for more funds. Especially if sales is not commensurate with your spendings. If you are going to acquire a loan, your variable cost must be minimal.
3. Market Survey
A lot of first time investors acquire loans for business without actually knowing what they want to do with it. Most of the time, the loan is in the bank for months before they finally get a clue of what they need it for. By this time, the interest rate is already ticking like a time bomb. Market survey enables us to take decisive actions in business without guessing. It involves research on the demand for a product or service, determining consumer preference, competition, foreign exchange, location awareness and having a projection of future market conditions.
4. Re-investing profit
In the first three years of business, the profit margin is not as high and expectations are not always met. Most business owners in Singapore make use of the little profit earned to service their loan and often do not have enough to re-invest. If you are acquiring a loan for business growth, there is the need to ascertain if the profit margin will be enough to service debts or repay loans acquired by employing the Pay Back period model.
Best Credit SG Pte Ltd also known as Cing Dien Credit in the past. We are a licensed money lender company in Singapore. We were approved as a licensed moneylender in Singapore more than 30 years ago by the Ministry of Law! If you require a loan today, get in touch with us, we will help you in every possible way.
Are you in need of cash? Get in touch with us! You can drop by our office at Blk 372 Bukit Batok Street 31 #01-374 (Level 2) Singapore 650372 or call us at +65 6272 5538 if you have any questions. All our loan consultants are well train to answer your needs.