Before applying for a loan at a financial institution, start being a responsible borrower. Building strong ties with your suppliers may be pretty beneficial when times are tough. If you can get better terms and bargain repayment with each seller, you could even be able to avoid taking out loans altogether.
Singapore banks and lending institutions offer responsible financing products for different business sizes. It’s up to you to research strategies and
Use a loan calculator
There are many available free loan calculators. Use them initially. They can estimate your monthly, weekly, or daily payments and the overall cost of the loan for you. You will be better able to determine how much you can borrow after learning this information.
Understand your debt-to-income ratio
A comparison of your annual profit to your annual debt is your debt-to-income ratio. You have a strong chance of getting a loan if your ratio is 1.0 or above. Of course, the better the ratio, the more likely you will get approved for a loan and see cost savings. Anything less than 1.0 should be a red flag that you are spending more than you are making, and you should think twice before taking on any more debt.
Give yourself a safety net
Ideally, you should save enough money to pay for your company’s expenses for six months. How much you should save will depend on the size of your company and the nature of your industry. This offers you the ability to handle some emergency needs without having to borrow and lowers your debt-to-income ratio, and makes you appear to lenders as the perfect borrower.
Make a strong business plan
Wise borrowers and intelligent business owners know the importance of a solid business plan for small enterprises. Create a strategy for the next two years that breaks down your costs and projects your income quarterly and monthly. With this information, you may quickly determine how much you’ll need to borrow and how much you’ll have available for repayment.
Don’t accept the initial offer
To ensure you’re getting the best terms on your loan, shop around and compare small business loan programs. Examine the small print and enquire about interest rates, early payment fees, and other costs.
Only borrow money as necessary
Your financial issues may not always be resolved by taking out loans. Don’t forget to consider other options, such as reducing expenses, downsizing, or looking for ways to boost your profit margin if you need to free up cash. Or, to better control your cash flow, you might want to think about using a responsible financing product to advance your invoices.
Pay your bills on time
Pay back loans on time when you borrow money. Call your lender if you cannot make a payment on time. It’s vital to be always in touch with your creditor. It’s not just the right thing to do; it could also assist in preserving your credit rating.
Bank with responsible lenders
To build a healthy planet and ensure a just transition, choose a lender with responsible financing products, as it helps you get funding while helping the environment in many different ways.