Short-term loans are a very important aspect of any business, and most business owners in Singapore are always looking out for the best short-term loan rates. This is because business is very unpredictable and an emergency need for cash can arise at any given time. With this, the need to understand the pros and cons of short-term loans is critical. There are many steps and factors to consider while obtaining a short-term loan in Singapore.
Going straight to step one, ask oneself the question of whether taking out a loan truly necessary. It might sound like a fairly obvious question when, obviously, anyone who can get away with not borrowing any money probably won’t borrow at all. However, it’s important to think deeply and explore any other means possible before resorting to taking out a loan.
For example, if the need for the money can wait until the next month when some funds from other wages or source of income are expected to come in, taking out a quick loan may not be necessary. Every business owner should be aware of the fact that an instant loan or short-term loan can actually be more expensive than a conventional loan. Here are some other things to know:
What is the minimum mark?
For small business owners, it is important not to rely too heavily on short-term loans, and this is because the less one borrows, the less one has to pay back. And these short-term loans typically come with higher interest rates than normal loans.
So what methods can one utilize to keep short-term loan borrowing to an absolute minimum? Well, borrow less. One of the big mistakes that many make is overestimating how much they can pay back and underestimating all the different unknowns and expenses that add up every month or every few months.
Underestimating short-term loans could potentially land any SME owner in a financially difficult situation when it comes to paying the loan back. And that’s obviously the last thing that any small business owner wants. As the decision-maker for borrowing the loan, only you have a say on the minimum amount to get depending on how much is required and your choice of a reliable money lender in Singapore.
Avoid making multiple loan applications
Business owners may be tempted do this because of the many short-term loans out there which offer different interest rates, different fees, different terms and conditions.
If there are a range of options available, anyone will be much more likely to make the best decision after having compared the interest rates offered by various moneylenders. However, applying for multiple loans at the same time can greatly hurt an individual’s credit score. Thus, it’s highly recommended for borrowers to compare the loan rates online before coming to a decision.