Start Up Business Loan [Infographic]
What is a Start Up Business Loan?
A startup business loan is basically funding for startup businesses.
Learn more about small business startup loans below.
How Do I Qualify?
Generally available for medical professionals who want to start a private practice.
How Do I Apply?
Startup business loans in Singapore are usually offered by alternative lenders and a few local banks. Apply for multiple options with Capable Loans.
Start Up Business Loans At a Glance
If you are an emerging business startup, or a medical professional looking to setup your own private practice, you will find that your business qualifies for a variety of small business startup loans.
While government-assisted loans such as SME micro loans are still an option, you might want to explore other ways to finance your startup business.
- Maximum Loan Amount: S$500,000
- Loan Term: 1 – 5 years
- Interest Rates: 2.8% – 4.5% per annum
- Speed: As fast as 2 weeks
The Pros and Cons
- Good for fresh businesses with little financial history
- Low interest rates
- Director(s) must have good personal credit history
- Limited to specific industries
Who Qualifies For A Small Business Start Up Loan?
As you might guess, many young and new businesses can qualify for a small business startup loan.
Since you won’t have a lot of revenue history, the most important factor to lenders will be your personal credit score:
The higher the score, the better your chances of qualifying.
What Documents Do I Need To Apply
To apply for a start up business loan, you will need the following documents:
- Bank statements
- Profit & Loss statements
- Balance sheets
- Income tax returns
- Identification card (NRIC) / Copy of passport
How Do Small Business Start Up Loans Work?
As a business owner just starting out, researching different financing methods and products can be perplexing or disheartening.
To make things easier for you, listed below are some small business startup loans for you to check out and make an informed decision.
1. Startup Equipment Financing
Many startups are unable to generate revenue without having hard assets such as transportation vehicles, manufacturing equipment, furniture, or commercial tools.
If you do not want to give up equity of your business in return for an initial investment, the recommended method of financing your business is through debt financing, in this case, specifically equipment financing.
Through equipment financing you will be able to obtain a loan of up to 80% or 90% of the equipment’s value. This equipment will be used as collateral, which allows financial institutions to recoup their losses by selling the equipment in the case of a default on the loan.
Having a collateral means lower interest rates and possibly longer loan tenures, giving you enough time to generate enough revenue to pay off the equipment.
Applying for start up equipment financing
Aside from the basic eligibility criteria, you will also need to source the equipment that you will be purchasing with a quote from the supplier, along with an explanation of operational usage of the equipment.
2. Startup Funding For Doctors/Medical Professionals
If you are a medical professional planning to open a new dental clinic or expanding your private clinic, a great option is to get financing with product specifically tailored for medical professionals.
When starting up a healthcare business, you will need funds to purchase medical equipment or to pay for renovation works. There are financing products offered by a few banks that provide dedicated doctor financing, with better understanding of the industry.
Why start up funding for doctors?
Simply applying for various equipment financing or renovation loan products might not be ideal for medical professionals, as the terms of business loans are not very flexible.
An industry-focused financing catered to your interests will almost always be the better option, allowing you to improve your cash flow and seize expansion opportunities.
Applying for doctor’s financing
Since financing for doctors is quite a niche category, not every bank will offer business loans specifically focused towards doctors and medical professionals.
Our recommendation is to let us handle the hassle of researching and reaching out to the financial institutions, while you can work on sourcing the medical equipment or contractors for renovation.
3. Crowdfunding For Startups
If you have a startup business concept that is innovative in nature, you might want to consider a reward-based crowdfunding campaign to raise funds for your startup while keeping equity in check.
A popular crowdfunding platform example is Kickstarter, where startup businesses put out crowdfunding campaigns along with tiered rewards given to contributors who commit a certain amount.
There are various crowdfunding platforms in Singapore as well, and many of them also offer crowdfunded debt financing for small startup businesses.
Benefits of Crowdfunding for small business startups
Crowdfunding is a cost-effective way to not only raise funds for your business, but to also market your business model / product to an international audience. As a bonus you will also be able to obtain valuable market feedback from contributors.
By judging investor interest via crowdfunding, you are able to estimate market interest of your product or business before actually executing your business strategy
FAQ on Start Up Business Loans
Startup Equipment Financing
While the interest rates for equipment financing differs for each financial institution, you can expect effective interest rates (EIR) between 5.2% – 8% per annum.
Some banks might also offer a flat interest rate. Loan tenures can range anywhere from 1 to 8 years or even longer depending on the nature of the equipment.
Startup Loan for Doctors/Medical Professionals
Depending on the nature of your loan, you can either expect rates similar to a business term loan of 9% – 11% per annum, or rates similar to equipment financing between 5.2% – 8% per annum.
If you are looking to financing a purchase of property such as a medical clinic, the rates would be similar to a commercial property loan between 1.2% – 2.5% per annum.
Crowdfunding for startups
With reward-based crowdfunding, your cost will be whatever fees the crowdfunding platforms charges, along with whatever payment processing fees that you have to bear. Altogether it is usually between 5% – 9% of the total funds raised through the platform.
If you are looking to get a crowdfunded business loan, interest rates are range from 9% to 14% per annum depending on the platform you apply for.
Although it seems costlier than a business term loan, the eligibility criteria is much easier to meet and you can gain beneficial information for your business startup.
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About Capable Group
Capable Group is a comparison platform for business loans in Singapore. As the leading aggregator of corporate loans and business financing solutions, we will help you to get the best SME loan for to grow your business. We work with multiple banks and accredited financial institutions to provide you with the latest financial products and interest rates.