As a business owner in Singapore, you may be considering various plans to grow your business, such as expanding your operations, purchasing more inventory, upgrading your machinery, or improving your cash flow. However, the process of applying for a business loan can be tedious and time-consuming. Different banks have different requirements and lending criteria, and if this is your first time applying for an SME business loan, you may not be aware of the complexity involved.The loan application process may seem straightforward – gather all the required information and documents, email them to the bank, and wait for a reply. However, this to-and-fro process can take a long time, especially if you have not organized your files regularly. Moreover, drawing up a good business proposal and making realistic projections can take up a lot of time. So, while you are busy managing your business, why not outsource the loan application process to a reliable SME business loan broker in Singapore?The question is, is it worthwhile to engage a broker to secure a business loan for you?A business loan broker, or SME loan broker, acts as a middleman between you and prospective funders. Their role is not just to source the best rates and financing deal for you, but also to ensure that the loan application process runs smoothly until loan inception and disbursement.What are the benefits of engaging a business loan broker?Firstly, an experienced broker is well-versed in the lending process, requirements, and credit documentation. They have knowledge of the various business loans available and are kept up-to-date with market rates as well as the industry rules and regulations. They will be able to advise you on more complicated business banking facilities such as trade financing and factoring. Given their experience with handling different loan contracts, they will also be able to explain the terms and conditions to you, especially when it comes to business loan fees, early loan redemption, and penalties.Secondly, relationships with bankers and funders are important. Having worked with many banks and financial institutions gives the SME loan broker the advantage of knowing which of them could offer the best deal. A resourceful broker would know which bank or funder will match your needs and is also kept updated on new loan products and promotions. What you are paying for is their extensive contacts and networks that they have built over the years with bankers who are responsive and reliable.Thirdly, in the event of a loan rejection, you can count on your broker to explore other alternative funding financing options for you. You may not qualify for a traditional bank loan, but your broker may still be able to secure alternative fundings for you. On top of being an experienced and resourceful loan broker, a good broker would have prepared an alternative strategy just in case.Fourthly, when your loan application is rejected, a broker will be able to advise you on possible reasons for rejection and how you can improve your credit standing over the next few months. Your relationship with your broker should be based on long-term understanding and trust. They will go down to the nitty-gritty details and pinpoint the areas that could potentially jeopardize your loan approval, thus increasing your chances of getting the loan. Different banks and financial institutions have different credit criteria and lending criteria that most business owners are not aware of. This could also depend on which industry your business is in. For example, some industries might have a high chance of approval in Bank A, while the same industries might not be the preferred risk for Bank B. Your broker will be able to advise you on this and save you the trouble of applying to multiple banks.Lastly, because your broker has contacts and relationships with different bankers, instead of approaching banks one at a time, your broker can submit your loan proposal to multiple banks and financial institutions concurrently. This can save you a lot of time from going from bank to bank. Moreover, your broker can get the best of the best loan terms offered in the market and advise you on the optimum loan deal for you, which translates into lower interest rates charged.All these being said, what could have stopped you from engaging a business loan broker?We believe that a relationship between a broker and a business owner should be long-term, and it has to be built based on trust and understanding. The loan application process takes up so much time and effort, and taking a loan might not be a one-off situation. Hence, it is important that you find a broker whom you can work with.While there are many professional and credible loan brokers out there, there are also unscrupulous ones. Here are some things you should look out for in choosing who to work with:Brokers who overpromise and guarantee a successful loan approval even before looking through your financials. The final decision lies with the bank’s credit approver, and regardless of how competent a broker is, lending criteria differs across the banks.Brokers who are often uncontactable, take a long time to reply to your questions, or always feed you with wrong information. It’s time to re-evaluate their credibility and competence before letting them have access to all your financial information.Your broker should be transparent in the amount of commission they are charging you for their brokerage service. You should both agree on the price and terms and conditions first before engaging them.Brokers who demand processing fees upfront or sign an exclusive broker agreement with you should be avoided. Loan brokers should only charge SMEs based on successful loan inception, i.e., Letter of Offer signed and funds disbursed.How much does it cost to engage a business loan broker?The commission a broker charges is usually calculated based on a percentage of your approved loan amount. Usually, it is 3% to 5%, negotiable depending on the broker. Certain considerations include the targeted loan size, the complexity of the case, and the financial standing of the company based on your company’s credit records, financial documents, cash flow position, etc.Remember, your broker will be doing all the legwork for you, from gathering documents and doing up a business loan proposal to mitigating any potential issues that could arise during the application process and securing an approval for you, and lastly ensuring no hiccups during the disbursement of the loan amount.In conclusion, using a business loan broker can save you time, effort, and potentially secure better loan terms. However, it is important to find a reputable broker and agree on terms and conditions before engaging their services. A good broker should be transparent and knowledgeable, with extensive contacts and networks that can benefit your business in the long run. So, consider engaging a reliable SME business loan broker in Singapore today and take your business to the next level.
