As a borrower, you should look beyond your immediate needs. A suitable Working Capital Loan lender should be able to match your evolving financial needs as your business grows. The longevity of the relationship should be your end goal in mind. To start off on the right foot, how do you choose the right lender for your business? Here are 5 key factors to consider:

Credibility

Before committing to something new, a common practice is to ask around our circle of friends and family. It is advisable to do the same when taking up an SME business loan. Before handing over your sensitive personal and business financial information, ascertain that your lender is trustworthy. Accreditations by objective parties play an imperative role. Check against this list of licensed moneylenders in Singapore. Actively connect with other small business owners who have been in a similar position. They are likely to provide reliable referrals. When you get in touch with a potential lender, do your own groundwork. Observe if your queries are promptly and accurately addressed.

Interest Rates

Chances are interest rate is your first concern as a borrower. Never settle for the first quotation you receive. You can only determine how competitive the interest rate of a Working Capital Loan lender is when you have seen the rates of others. Most of the time, interest rates are proportional to the urgency of funding. If your business demands a higher response rate, it will probably come with higher interest rates.

Additional Fees

There are a number of costs associated with a Working Capital Loan. Some lenders leave it to you to read the fine print. Be aware of the basic costs to expect. It equips you to enquire on specific areas if details are not laid out transparently. The additional fees you can expect to pay include: origination fees, appraisal fees, underwriting fees and processing fees. Some lenders may offer packages that waive certain fees and others may include other miscellaneous fees.

Flexibility of Repayment

Some banks or financial institutions may offer no room for negotiation when it comes to fulfilling your repayment plan. Look for a lender that offers flexibility. You will find this quality especially invaluable when unexpected events arise. For example: seasonal fluctuations, business expansion opportunities, economic downturn etc. In these situations, it is vital that your lender is open to providing alternative options. For instance, an alternative option will be stretching your loan tenure without charging an exorbitant penalty fee.

Response time

Time is of the essence when it comes to business. Banks can take up to months to approve a loan application. By the end of the process, a golden opportunity may have slipped you by. In this aspect, a private Working Capital Loan Lender typically one-ups a bank. The key response times are: time taken to deliver proposal, time taken to deliver commitment, time taken to deliver closing documents and time taken to disburse funds. The shorter the response time, the lesser opportunity cost incurred by your business.

Conclusion

In conclusion, your choice depends on your business priorities. There is no one-size-fits-all solution to finding a Working Capital Loan Lender. More often than not, one or more factors will be compromised in a financing arrangement. For example, if response time is on the top of your priority list, it is highly likely interest rates may be higher.

Why ETHOZ?

Incorporated in 1981, ETHOZ is an established Working Capital Loan Lender. Our shareholders are well-established in the market – Tan Chong Motors and ORIX. At ETHOZ, we understand the importance of being equipped with cash flow to capitalize on a window of opportunity. Hence, we pride ourselves on our competitive response time. With our customers’ varying and evolving needs in mind, we offer flexible repayment options. Our processing fees and interest rates are fixed, providing transparency to all our customers.

We hope our series, ‘Guide to Working Capital Loan for SMEs in Singapore’ has equipped you with a better understanding of Working Capital Loans.

Visit our Working Capital Loans for small business page or call us at 6654 7799. Alternatively, drop us an email at capital@ethozgroup.com!