Without adequate funding, small and medium-sized enterprises (SMEs) may find themselves unable to capitalise on timely market opportunities. According to a survey by UOB, Accenture and Dun & Bradstreet, 58% of SMEs in Singapore have a financial runway that can sustain them for less than six months. Securing adequate financing for SMEs is thus a critical lifeline for both growth and business continuity.
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Understanding the Need for Long-Term Financing
For many small businesses, working capital and cash flow remain a key concern to sustain daily operations and support business expansion. Both short and long-term business financing options offer varying degrees of agility and speed when it comes to accessing financing for projects:
Loans with a shorter term repayment period typically benefit SMEs who can realise the returns on their capital usage within a short time, minimising the overall absolute interest accumulated. Examples of these short-term financing gaps include covering operational expenses such as rental, salaries, or inventory purchases.
On the other hand, a longer-term financing repayment period provides SMEs with the flexibility to take on longer term projects. This not only ensures that they can achieve their objectives and weather economic uncertainties, but also allows them to take advantage of lower interest rates that financiers are able to provide over the longer period, since repayments are now stretched out. Examples of long term financing include project financing, overseas business ventures or fixed asset purchases, where returns from investments take a longer time to be realised.
While short-term micro financing has its benefits, for some companies, it is insufficient for various reasons, including:
- Limited Time for Growth: The shorter repayment period associated with short-term business loans can limit an SME’s ability to take on longer-term projects such as market expansion or large-scale capital investments into machinery. This can hinder organic growth through capital investments.
- Frequent Renewals: Small businesses may need to renew or refinance short-term loans frequently, which can lead to administrative burdens and additional costs.
Furthermore, through engagements with our customers, we found that many needed a longer business term loan to finance their longer term projects.
To that end, Funding Societies iterated on our original business term loan product for SMEs and developed an enhancement, which allows loan repayments over 36 months – Introducing Business Term Loan PRO!
SMEs who require capital expenditure to invest in long term fixed assets, or those who need financing for extended periods of time, such as for international expansion, will stand to benefit. Furthermore, with a longer repayment, business owners regain the capital – both in terms of time and money – to extend their runway and build a sustainable business.
Introducing Business Term Loan PRO
Business Term Loan PRO offers a flexible business financing solution designed to meet the diverse needs of SMEs. With a loan tenor of up to 36 months, it allows ample time for you to execute and realise the benefits of your long-term projects. To ease access to funds, we offer a competitive origination fee starting from 3.5%, ensuring that you can secure the financing you require without incurring excessive upfront costs. Additionally, our commitment to efficiency means that we require minimal documents for the hassle-free loan application. Upon approval, you can expect a fast disbursement within one week, enabling you to jumpstart your projects promptly. Depending on how much of a financial boost you need, Business Term Loan PRO offers a range of loan quantum options between S$100,000 and S$300,000 to cater to your specific requirements to help take your business to the next level.
Benefits of Business Term Loan PRO on your Small Business
Taking advantage of this term loan can bring substantial benefits in sustaining overall cash flow for your business. Here’s how:
Lower Monthly Payments: By taking a loan with a tenor of up to 36 months, you can enjoy the advantage of lower monthly payments. This not only eases the immediate financial burden on your business but also offers more room to allocate funds to other critical aspects of your operations. With manageable monthly payments, you can focus on meeting day-to-day expenses, investing in expansion, and enhancing your business without the strain of larger frequent loan instalments.
Improved Cash Flow Management: The extended loan tenor also contributes to improved cash flow management. With a longer tenor, you can maintain healthier cash reserves, thus ensuring that you have sufficient working capital to cover operational costs and address unforeseen expenses.
Flexibility for Long-Term Projects: Rather than just short-term contingent requirements, long-term financing provides the runway and certainty for your SME to invest in projects or initiatives that require a longer gestation period. Some examples are research and development efforts, market expansion, or development of new product lines that enable your business to innovate and stay competitive.
How to Make the Most of your Business Term Loan PRO
Now, let’s delve deeper and discover how your SME can make the most of this business term loan to ensure that the advantages are not only realised but optimised to its fullest potential.
- Financial Planning Tips for Long-Term Projects
Successfully managing a business term loan for long-term projects starts with sound financial planning. It’s essential to create a comprehensive roadmap that ensures every dollar is used efficiently. Start with a detailed business plan that outlines project objectives, timelines, and budgets. In order to avoid unexpected financial hurdles, it is important to accurately estimate your costs. So, allocate your funds wisely to ensure the most critical project components receive sufficient resources. Finally, maintain a contingency reserve to address unforeseen challenges, and regularly monitor your project’s financial performance.
- Leveraging the Loan for Growth and Expansion
Beyond simply funding your long-term project, your business term loan can be a catalyst for broader growth and expansion. Consider how the project aligns with your long-term business goals. Will it open doors to new markets, customer segments, or revenue streams? Leverage the loan to not only complete the project but to also bolster your business’s overall market presence and competitiveness. Use the momentum generated by the project’s success to explore further expansion opportunities, diversify your product or service offerings, or invest in marketing and sales initiatives that can capture a larger share of your target market.
- Mitigating Risks and Challenges
Every long-term project carries inherent risks and challenges. Successful businesses proactively address these issues. Begin by identifying potential risks, such as cost overruns, delays, or unexpected market shifts. With that in mind, develop mitigation strategies to counteract these risks and maintain your project’s trajectory. Risk assessments should also be an ongoing process, with periodic reviews and adjustments to your plan as needed. Additionally, consider establishing an effective project management framework to ensure your long-term project stays on track and within budget.
How to Apply for Business Term Loan PRO
Navigating the myriad of financing options in the market can be complex, so we’ve streamlined the process for you.
Eligibility Criteria
Business Term Loan PRO is available for SMEs who:
- Are a Singapore registered business
- Have a minimum 30% shareholding by a Singaporean Citizen or Permanent Resident Director
- Have more than 1 year operating history
- Have an annual turnover of >S$500,000
3 Easy Application Steps
Step 1: Submit your application here
Step 2: Review the offer and sign the Letter of Offer if you agree to the terms
Step 3: Receive your funds within 48 hours
From now till 15 November 2023, get a free* 11-inch iPad Pro when you successfully disburse a Business Term Loan Pro with us.
*Terms and conditions apply
Navigating Long-Term Business Success
Whether you’re a startup eager to scale or an established small or medium-sized enterprise seeking fresh opportunities, easy access to a long business term loan can help to smoothen cash flow and sustain your business for a longer period of time. Nonetheless, if you’re unsure of what type of small business financing suits your SME, take this short eligibility assessment quiz to guide you!
If you’re ready to learn more about Funding Societies’ Business Term Loan PRO, explore our website today.
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’ Business Term Loans are fulfilled by FS Capital Pte Ltd.