6 SME Loans Do’s and Don’ts for First-Time Business Owners

Everyone, if not plenty of people, have been affected by the COVID-19 pandemic. For some, it has led to the downfall of their businesses. Others might have faced challenges that they are not prepared to face. Either way, it has helped them become resilient because they now know how they will handle a crisis like this in the future. First-time business owners might have probably panicked because their plans were not working as they imagined. Some of them might have even backed out, and it was okay. For some strategic first-timers, they would know that taking an SME loan in Singapore would be the way to go. If you are one of them, you have clicked the right article!

Here, you will learn about the dos and don’ts of getting an SME loan in a time like this. Allow this article to be your guide as you start your business journey again this 2021!

What is an SME loan?

First and foremost, you must know the loan you are about to get before you seek any lenders in Singapore. SME stands for Small and Medium Enterprises. If you say SME loans, it means that these are loans applicable and offered only to small and medium-sized business owners. These are tailor-made to suit the needs and requirements of the business. For instance, you are looking to maintain a healthy cash flow this year, you should think about applying for an SME loan.

It is one of the smartest financing options for your business since it:

  • Has flexible repayment terms
  • Easy and quick application method
  • Low-interest rates

If you are planning on getting one this year, allow these do’s and don’t be your guide in your application process.

What to DO When Getting an SME Loan?

While the success rate of getting an SME loan is relatively high, you should not be complacent since there are many factors that they will consider before they accept your proposal. Let these do’s of getting an SME loan help you out for a successful application.

  1. DO create a realistic budget plan

It is like how words have meaning, numbers also have to be substantiated. When you want to get a certain amount of money for everyday operations that would keep your cash flow steady, you have to justify the amounts and determine how it can contribute to your business.

  1. DO attach budget references

Make use of real figures and real research to support your claims or ideas that you are a business that is worth investing in. For instance, if you are in the service industry, you should state that you can sustain a certain amount of customers per month with a certain amount of Singapore dollars.

  1. DO include that you have savings

Establishing a business should be a calculated risk, meaning that if you don’t want to pass the debt to your family, you have to have savings. No lender would give you an SME working capital loan if you don’t have enough savings to pay the first year of your loan. Thus, you must assure them that you have saved enough money.

Getting a loan would be hard if you cannot promise that six months would not be enough for you to be profitable. Hence, think about your budget plans carefully. If not, no one will want to loan you more money after the next six months, and your credit score will get tampered.

What are the DON’TS When Getting an SME Loan?

When there is a DO, there would be DON’TS too. Now that you know what you should do, here are some of the things you should avoid because it would decrease your chances of getting an SME loan.

  1. DON’T overestimate or underestimate your expenses

It would be hard to find the centre of the scale when you cannot see the scale itself. In getting prepared to get a loan, it is somewhat similar to that. You cannot see it because no one has seen the future yet. Hence, you would not know if you are overestimating or underestimating your budget. To overcome that, what you need is to be meticulous and do plenty of loan research.

Once you computed your budget, go back to it and reduce your income 25 to 50% less than what your due diligence compelled you to put it on your plan.

  1. DON’T apply for other loans aside from what you already have

It may be tempting to apply for many loans because you want to ensure that one of them would stick. This is not the way to go. Submitting a full application to one lender will give you a hard credit pull which will dent your credit score. Hence, you should know that this approach would make it harder to qualify for a loan.

  1. DON’T forget to ask about their penalties

The last thing that you want to happen is paying more than what you are due. Thus, you should know about a lender’s SME loan conditions. Some may have a prepayment penalty. It is a fee that your lender would charge you if you pay off a loan ahead of the due date. Also, they might also have penalty fees when you are late in paying your loan. Ask them about their terms and conditions to ensure that you would not be paying more than your borrowed money and interest.

Indeed, there are plenty of considerations when you want to get an SME loan in Singapore for the first time, but these should not discourage you from materialising your business ideas!

Finding Reliable Lenders with the Help of TT Media

Save yourself time in finding a reliable lender of SME working capital loans in Singapore because TT Media compiled them all for your convenience! You can see their list of reliable lenders when you visit their website today.

Go to to get started on your search!

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