Organizing your own business requires a lot of investments from an entrepreneur, especially material ones. For a new business, costs are usually exceeded i.e manufacturing costs, marketing or promotional costs and other types like company incorporation in Singapore (if in case) are also included. If a businessman does not have the funds to implement the idea, then they can apply to the bank or any other financial institutions for a loan. Today, many moneylenders offer fairly favourable conditions for obtaining borrowed funds. But, getting a loan for opening or developing a small business is not entirely easy. For this, you need to study the step-by-step algorithm for obtaining a loan, choose the optimal offer and wait for the bank to approve the application.
Moneylenders usually issue a targeted business loan in Singapore and other countries to entrepreneurs and companies. This means that the borrowed money must be spent on a specific task. like the purchase of transport or equipment, the construction of industrial or commercial premises, participation in tenders. The borrower confirms all expenses on the loan with documents like contracts, acts, invoices.
But, getting approval for such loans requires proper eligibility criteria. It means you need to cross-check the contract and make sure that you have all the documents to go through the whole procedure. This will not only make your loan approval process easier but also help in offering a loan. So, what would be the eligibility criteria for business loans? Let’s have a look at the following guide to find the answers.
- Age of Applicant
- Credit Score and Credit History
- The Activity of the Organization
- Availability of Collateral
How to Get a Loan for your Business?
For the borrower, a business loan can become a serious obstacle to the timely payment of a debt. To begin with, you should find out how you can get a loan to buy a ready-made business, and what you need for this. Every lender has eligibility criteria, which is fulfilled by business owners to get a loan. Different lenders have different criteria and the owner should first go through the criteria to determine whose eligibility criteria meets with his needs. Having proper documentation and age will avoid the chances of rejection.
Some of the basic eligibility criteria rules include business turnover, the activity of the business, age of an applicant, and credit history along with the appropriate required documents. Other basic criteria for loan approvement are:
- Loan amount,
- Loan purpose,
- Business plan,
- Type of industry,
- Entity type (LLP, proprietorship, etc.),
- Licenses and permits for business,
- Employer identification number,
- Proof of collateral,
- Annual business revenue and profit,
- Bank statements, balance sheet,
- Personal and business tax returns,
- and legal contracts and agreements.
Eligibility Criteria of Getting a Business Loan
For obtaining a loan, make sure you are availed to fulfill the licensed money lender loan application’s requirements. The borrowers must have citizenship to be registered temporarily or permanently in the area of circulation. In addition, they also have a permanent place of work in the region where the credit institution is present.
Age of Applicant
Usually, bank employees and money lenders pay special attention to the age of the borrower. The minimum possible age of a person to whom a loan is issued is 21 years. It should be noted that in certain cases a loan is issued at 18 years. As for the maximum age, the age should not be more than 65 years at the time of loan maturity.
Credit Score and Credit History
When applying to the bank for a loan, each borrower has a good credit history. If you have provided completely reliable information about yourself and your loan history is positive, then your chances of receiving funds increase several times. Usually, the moneylenders check the credit score of the applicant before granting a loan. A credit score is a three-digit number which ranges from 300 to 850. And, the credit score eligible for a loan must lie between 750-900. But different lenders have their own perspective for checking the credit history. Always remember that having a good credit score will automatically higher the chances of getting a loan at affordable interest rates.
The Activity of the Organization
Number of years a business has been active is also a criterion to be eligible for a business loan. Most of the lenders consider a minimum of 3 years of activity for granting a loan while some provide loans that are just a year old. During the loan registration, the lenders carefully check it and issue the loan. In this case, the age of the company is very important since financial institutions are sceptical of organizations that have been operating for less than six months. In some banks, the interest rate depends on the age of the company. For obtaining a loan, the Singapore fast cash loan services of moneylenders will provide loan at low-interest rates.
Availability of Collateral
Collateral must be provided if possible. This is due to the fact that the lender is more willing to provide a loan if it is convinced that it will be able to cover all losses in case of non-return of money.
When submitting an application, you must carefully think over everything and evaluate your chances. Be sure to consider your own capabilities while paying off your debts. Borrowing money from a reputable organization like a Singapore loan company can make monthly payments convenient for you. So, whether you are ready to mortgage your own property or want to solve problems with starting your own business, always follow the right eligibility criteria to take out a loan. After all, taking a loan from a bank is the only way out of a crisis situation.