What are the factors that come to your mind if you are representing a business house that is looking for a business loan in Singapore? You might find this a crazy situation, especially if you are located millions of miles away from this business hub. The reason why you need to think on these lines is to help you plan your financing and shore up your credit history, in spite of the current pandemic. Here, we look at two main ways in which a business loan can be obtained in Singapore.

Trade Financing

This is probably the most popular way that business is done not just in Singapore, but in numerous cities across the globe. This is a financial instrument that is issued by a bank which helps in the financing of inventories or any kind of materials that is to be purchased from specific suppliers. If the supplier is going to be someone from outside the country; or, in other words, if you are importing the goods, you can get the bank to issue an LC – or a Letter of Credit. These are documents that supports you for a predetermined period, during which time the goods are received, and the final payments are made. Along with this, there is the practice of issuing TR or Trust Receipts that have a validity period of around three to four months.

SME Loans

It is necessary to understand the concept of SME here – Small and Medium Enterprises – in most countries, the size of a business is determined by its annual turnover. In a crisis, similar to the one that is prevailing now, SMEs are the first businesses to face the brunt. They are not able to generate enough cash flows and end up having to borrow heavily. This leads them into a circle of complete dependence on financing institutions. In a country like Singapore, there are some dependable banks that have stepped into help SMEs with easy working capital loans that do not pressurize them too much. Instead, they study the situation and offer financial solutions that are tailormade to suit the needs of the specific business unit. Once this is done, through an authorized representative, it becomes easy for the SME to go in for the right kind of loan.

Since Singapore is still a land of opportunity, it is necessary to explore and research into the various possibilities before applying to any specific bank for a loan.