How To Find The Best Short Term Business Loan

While there are many short-term business loans, finding the best one for your business is very important as it can save you time and money in the long run. However, knowing where to start when looking for a good short-term business loan can be challenging.

In this article, we will discuss how to find the best short term business loans, what is a short-term business loan, factors to consider when choosing the best one for your business, and the types of business loans for small and medium-sized enterprises (SMEs).

Short Term Business Loan

A short term business loan is a loan that needs to be repaid quickly, usually within six months to a year. There are many short-term business loans in Singapore, such as term loans, invoice factoring, and lines of credit.

Each type of loan has its terms and conditions, so it’s essential to compare different options before choosing one.

Loan For Short Term

OCBC Business Revolving Short Term Loan is an example of a loan for a short term that is ideal for small businesses. The revolving loan has a simple application, quick approval of up to $200,000

Factors To Consider When Choosing The Best Short-Term Business Loan In Singapore

There are many factors to consider when you want to know how to find the best short term business loan for your business. Some of the most important factors include the following:

Business Loan Interest Rate

The business loan interest rate in Singapore is the percentage of the loan you will need to pay back in addition to the principal. When comparing loans, look at the Annual Percentage Rate (APR), which includes the interest rate and any fees charged by the lender, to compare the costs.

Ensure you choose a loan with an interest rate that you can afford, preferably one with the lowest Annual Percentage Rate (APR).

Loan Terms And Conditions

Each loan has terms and conditions, so you must understand the details before signing on the dotted line. Some things to look for include the repayment schedule, late payment fees, and prepayment penalties.

Loan Amount And Purpose

The amount you borrow and the purpose of the loan will also affect your decision. Some lenders have minimum and maximum loan amounts, so you’ll need to ensure the amount you borrow falls within those limits.

In addition, some lenders specialize in certain types of loans, such as startup loans in Singapore or inventory loans, so choosing a lender that offers the type of loan you need is essential.

Lender’s Reputation

No one wants to do business with a bad lender, so be sure to research the reputation of any lender you’re considering. You can read online reviews, check with the Better Business Bureau, or ask friends and family for recommendations.

If you can’t find anything good about a particular lender, it’s probably best to avoid them. However, even the best lenders will have a few negative reviews.

Loan Tenure

The loan tenure is the amount of time you have to repay the loan. Most short-term loans have a repayment period of six months to a year, but some lenders offer longer terms. If you think you’ll need more time to repay the loan, look for a lender that offers flexible repayment terms.

Size Of The Company

The size of your company will also affect your decision. Some lenders only work with small businesses, while others will lend to companies of all sizes.

If you have a large company, you may need to look for a lender that specializes in working with businesses of your size. However, if you have a small business, you may be able to get a better deal with a traditional bank.

Various Ways In Which You Use A Short-Term Business Loan

There are many ways that you can use a short-term business loan. Some common uses include:

To cover unexpected expenses: When your business is faced with an unexpected expense, such as a natural disaster or equipment failure, a short-term loan can help you cover the costs. However, you must be 100% sure that you can repay the loan within the given timeframe.
As startup capital: If you are starting a new business, you may want to purchase inventory, rent a space, or hire staff. A short-term loan can help you cover these costs if you do not have the cash on hand to use to finance your startup.
To finance a large inventory purchase: If you know you will have a busy season, you may want to finance a large purchase in advance. This may require a huge amount of cash that you may not have on hand. In this case, a short-term loan can purchase the necessary inventory to have it on hand when your customers want it.
To start a new project: In most cases, new projects require investment. If you do not have cash, a short-term loan can help you get the project off the ground by financing the initial costs. These include the costs of materials, labor, and marketing.
To help during a slow season: If your business has a slow season, you may need a short-term loan to help you cover your expenses. This loan can help you make ends meet until your business picks up again.
To consolidate debt: If your business has multiple debts with high-interest rates, and you want to consolidate those debts into one loan with a lower interest rate, a short-term business loan can help you do that. This can save you money in the long run by reducing the interest you pay on your debt.
To cover the costs of expansion: If you are expanding your business, you may need to finance the costs of renovations, new staff, or new inventory. A short-term loan can help you cover these costs to focus on growing your business.

Small And Medium Enterprise Loans

Small and Medium Enterprise Loans are a type of loan specifically designed to help small and medium enterprises (SMEs) with their financing needs. These loans can be used for various purposes, including working capital, expansion, equipment purchases, etc.

SMEs are a vital part of any economy and often have difficulty accessing the same financing level as larger businesses. This is where SME loans come in. By providing smaller businesses with the financing they need, SME loans can help these businesses grow and thrive.

Types Of Business Loans For SMEs

Various types of SME loans are available, each with its benefits and drawbacks. Your business’s best type of loan will depend on your specific needs and circumstances. Some of the most common types of SME loans include:

Business Loan

A business loan is a loan specifically for business purposes. It is unsecured, meaning that it does not require collateral. Business loans can be used for various purposes, such as expanding your business, buying equipment, or hiring new employees.

Startup Loan

A startup loan is a loan specifically for startup businesses. It is very easy to qualify for this type of loan, as it only requires that you have been operating for a few months with some revenue.

Government-Backed Loans

The government implemented government-assisted business lending programs to assist Singaporean businesses in 2020. A government risk share of up to 70% is included in these loans, which are managed by Enterprise Singapore (ESG)

ESG presently provides three primary credit options:

Enterprise Financing Scheme – SME Working Capital Loan (EFS-WCL)

It is a working capital loan that helps SMEs meet short-term funding needs. It offers a maximum loan limit of $300,000. The government risk share is up to 50% of the loan amount.

Enterprise Financing Scheme – Trade Loan (EFS-TL)

It is designed to help SMEs with their short-term and medium-term funding needs for international and local trade activities. It has a maximum loan amount of $5 million. The government risk share is up to 70% of the loan amount.

Invoice Financing

This business loan allows you to borrow money using your unpaid invoices as collateral. The loan amount is typically based on a percentage of the total value of the invoice.

Commercial And Property Loan

A commercial and property loan is a loan that is used to finance the purchase of a commercial or industrial property. The loan is typically used to purchase offices, retail, or warehouses.

Equipment And Machinery Loan

This loan is used to finance the purchase of new or used equipment, such as machinery, vehicles, or office furniture. The loan amount is typically based on the value of the purchased equipment.

Comparison Of Different Types Of SME Loans

Comparing the different types of SME loans can help know how to find the best short term business loan for your business. Here is a table to help compare the small business loan in Singapore.

Loan Type	Maximum Amount Of Loan	Rate Of Interest	Tenure Of The Loan
Business Loan	$400,000	8-11%	One to five years
Invoice Financing	70 to 90% of the invoice amount pledged	7.2%	Up until the invoice is paid
Startup Loan	$100,000	7-10%	One to four years
Commercial Property Loan	80% of the property's value	3-7%	Up to 30 years
Equipment And Machinery Loan	Up to 90% of the equipment or machinery's value or purchase price	4-6%	Annually renewable for a period of up to one year

Where To Get An SME Loan

There are a variety of different places you can get an SME loan. Some of the most common places to get an SME loan include:

Some Banks

Some banks are a common source of small business loans in Singapore. You can get an SME loan in Singapore from some banks, such as DBS Bank, OCBC Bank, or United Overseas Bank.

Your Lenders

You can get a business loan from your lenders if you have a good credit history. There are many lenders in the market, and they can offer you various loan products with different terms and conditions. You should compare the loan products from different lenders and choose the one that best suits your needs.