Micro Loans have become an increasingly popular option for small businesses looking for funding. While the loan can provide much-needed capital for businesses, it also has potential drawbacks. Micro Loans are generally smaller in size compared to traditional business loans. Additionally, Micro Loans can be a valuable resource for small businesses, especially those that are unable to obtain funding through traditional means. However, it’s important to weigh the pros and cons before deciding whether this option is right for your business.
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1. Fast approval
A significant advantage of Micro Loans is the fast approval process. Funding Societies’ Micro Loans have sped up the process, as it only takes 2 minutes to apply. Borrowers will receive their funding confirmation within 2 hours. The distribution of the funds will be sent to you within 48 hours upon confirmation. This speed can be a huge advantage for small businesses that need funding quickly. For instance, if you need to purchase inventory, equipment, or cover unexpected expenses, a Micro Loan can provide you with the necessary funds to do so promptly.
2. Small amount
While the quick approval process can be an advantage, the small fund size of Micro Loans can also be a disadvantage for some businesses. The amount offered by Micro Loans is typically smaller than what traditional lenders would provide, which may not be enough to meet the funding needs of some businesses. This limited borrowing capacity can hinder businesses from reaching their full potential and may require them to seek additional funding from other sources. Funding Societies however, offers S$3,000 to S$100,000, which is a significant range of capital to fund your business needs in comparison to other funding options.
3. Be in support of local social enterprises
Micro Loans are a great option for SMEs that want to make a positive change in their communities. Some micro lenders solely focus on providing funds for social enterprises; this means if your business has a strong social or environmental purpose, you may have a better chance of securing a Micro Loan than a traditional business loan. Additionally, by choosing a micro lender that supports social enterprises, you can feel good knowing that you are not only funding your business but also contributing to a good cause.
4. Hidden fees
While Micro Loan can be a quick and convenient funding option for small businesses, they often come with additional fees that borrowers should be aware of. It’s essential to read the terms and conditions carefully to understand the fees associated with the loan. Failure to do so can result in unexpected charges, which can have a negative impact on your business’ finances. Some micro lenders may also charge higher interest rates than traditional lenders due to the risk associated with lending to small businesses.
Micro Loans can be a viable option for small businesses looking for quick and easy access to funding, especially for those who prioritise supporting local social enterprises. However, the limited amount and short repayment period may not suit every business’ needs. It is important to carefully consider the pros and cons before deciding if a Micro Loan is the right choice for your business.
Check out our website for more information to uncover how we can support you in obtaining the essential resources to help you with your business.
Disclaimer: The information provided to you in this blog post is intended only for general information purposes only and does not constitute legal or other professional advice on any subject matter. The materials and the information provided are not intended to be and do not constitute an advertisement or solicitation. In no event will Funding Societies be liable to any party for any direct, indirect, incidental, special, consequential or punitive damages for use of such information by you or any unauthorised third party.
Funding Societies’ Micro Loan are fulfilled by FS Capital Pte Ltd.
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