An Entrepreneur’s Guide to Funding Your Local Business

An Entrepreneur’s Guide to Funding Your Local Business

Over the years, there has been an increasing number of new businesses being set up in Singapore. Reports show that at least 7% of Singapore’s population engages in entrepreneurial activity and at least 1 out of every 100 Singaporeans run their own business. But with all the benefits of being your own boss, there are still some challenges that need to be carefully navigated when setting up your own business.

One of the biggest entrepreneurial challenges is finding adequate financing to execute business plans and run operations in the market, especially given the current economic downturn due to the coronavirus pandemic. Many small businesses casualties are seeking financial help or relief to prepare for what lies ahead.

Thus, whether you’re a businessman looking to turn your entrepreneurial plans into a reality or an owner of a startup looking to raise capital, we’ve put together a list of funding options that are available in Singapore.

1. Taking a Bank Loan

Taking out a bank loan is a reliable method to finance your small business. However, bank loans are often tough to qualify for as banks are more inclined to finance firms with either a long and credible track record or substantial private assets as collateral. Banks also approve loans based on this financial information and therefore, loan quantum can be low, leading to insufficient funds to operate.

Another important thing to note is, though you get to maintain full management and control over your company as the bank will not get involved in any aspect of which you run your business, the interest rates for small-business loans from banks can be high, ultimately stunting your company’s business growth. If you also see yourself needing funds more urgently, be mindful that banks take a longer time to approve loans and disburse funds. Therefore, it’s important for small business owners to weigh the advantages and disadvantages of bank loans against their financial capabilities.

2. Taking a Term Loan

Businesses may find it hard to innovate and keep up with evolving market trends as well as customer and resource demands. In order to survive, small businesses especially, need to innovate and adapt. To do this, you will require financial means to support the changes and improvisations you decide to make.

At ETHOZ, we provide business financing support in the form of various term loans for small businesses, SMEs and MNCs across many industries; allowing companies to grasp crucial opportunities and continue to grow during trying times.

From working capital loans and business term loans to shipping loans and renovation loans, we provide different term loans that cater to the specific needs of your business. We can finance anything from daily operational expenses, employee payrolls and the clearance of debt to the purchase of fixed assets such as inventory or equipment and even the refurbishment of offices or retail space. Apart from financial information, ETHOZ is also able to take into consideration your assets such as property as collateral ultimately providing you with a higher loan quantum, giving you more funds to operate your business.

As every business has different financial considerations, having a good understanding of the way your business works will help you make the right decision when it comes to funding. ETHOZ offers term loans that are priced competitively at affordable interest rates catered to your financial budget and business needs.

3. Self-funding

Self-funding refers to the use of your own financial resources such as capital from your personal savings account or credit cards to fund your business. This is generally considered a risky option because one misstep could mean the end of your startup and a major setback in your personal finances.

4. Crowdfunding

Alternatively, crowdfunding is an innovative system of business financing which consists of the collection of monetary contributions from large groups of people. There are popular crowd-funding platforms in Singapore such as Funding Societies and Kickstarter that look specifically into the financing of small business startups in Singapore.  Do be mindful, however, that the interest rate for crowdfunding is usually high.

5. COVID-19 Government Schemes For Local Businesses

In addition to the attractive government grants and funding schemes made available to startups in Singapore, enhanced measures and financing initiatives have been rolled out in 2020 to help businesses respond to the global economic disruption caused by the coronavirus pandemic.

Financial support measures from the government across various sectors has helped businesses address immediate needs while endeavouring to tackle and adapt to long-term effects from this economic setback. There are even Booster Packages aimed specifically at helping the E-Commerce and Food Delivery industries.

For companies that are looking for financing options in Singapore, a working capital loan is a good option, as loan limits have been raised due to COVID-19. At ETHOZ Capital, our Working Capital Loan schemes are designed to cater to SMEs with group revenue of up to $100 million or a maximum employee count of 200. This allows eligible companies, to apply for a loan amount of up to $1 million dollars.

If you’re looking for a financing option to help manage more urgent business needs, the Temporary Bridging Loan Programme (TBL) is another suitable option for you. Introduced along with the Budget 2020, the Temporary Bridging Loan Programme (TBL) is a government-assisted financing scheme made available to SMEs across all industries in Singapore to provide working capital to fund business needs even the current economic climate.

As a participating PFI, our relationship managers at ETHOZ Capital can provide you with the details needed regarding eligibility, loan terms and so on to ensure your application for a TBL may get approved with ease.

To find out how to apply for a TBL, you can refer to our guide here, and if you want greater insight into how the Budget 2020 and Government Financing Schemes can help your business through these challenging times, read our in-depth article here.

Finding Opportunities for Business Funding in Singapore

With most small businesses, navigating financial challenges to raise capital is not easy and a lot goes into working towards and achieving one’s business goals. As mentioned above, having a deep understanding of your business will be the first step in figuring out the type of financial solution you require. However, in some cases, the solution may not be straightforward and if you require some assistance, our experienced relationship managers can help you out with this. Simply give our team at ETHOZ a call at 6654 7799 or drop us an email at contactus@ethozgroup.com today!

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