Other Financing

One of the biggest struggle that new companies face is the lack of track record or even an existing operation. Thus, it becomes almost impossible to obtain a traditional business loan. Even if a loan is obtained, it is likely that you might be faced with a high interest loan (possibly 3-4% per month). As such, when you actually do the math, a personal loan might actually be a way better option.

Why choose Revenue-based Financing?

Hire Purchase Financing

Motor Vehicles
Automation/Machinery
Equipment Financing

Mortgage Financing

Resi/Commercial Property Financing
Property Re-financing 
1st & 2nd legal mortgage
Cash-out of property

Overdraft Financing

Revolving credit facility
Secured with collateral (e.g; property, fixed deposit, key-man Insurance, vehicles)

The Classic Personal Loan

A personal loan is properly defined as a loan that is disbursed into a borrower’s personal bank account. This is not to be mistaken with other loans typically associated with it such as an auto loan or a renovation loan. The two mentioned are loans that are paid directly to the car dealer and contractor and not into the personal bank account. As such, auto loans and renovation loans are not appropriate for business use as there is no flexibility in its usage.

Here’s a classic path to your personal loan

1. It all starts with your income

Depending on your annual income, you may be entitled to a loan quantum that is a multiple of your monthly income. See table below.

Maximum Loan quantum

Maximum Loan quantum	Banks	Licensed Money Lender
Less than S$20,000	–	Max S$3,000
S$20,000 – S$30,000	–	x6
More than S$30,000	x2	x6
More than S$40,000	x4	x6
More than S$120,000	x8	x6

As you can see, banks in Singapore only serve the segment earning more than $30,000 a year and can lend up to 8 times your monthly income. Thus, anyone earning less than S$30,000 can only borrow from a licensed money lender.

Individuals earning S$20,000 to S$30,000 are best served as they can borrow up to 6x of their monthly income. For individuals with no declared income, or income lesser than $20,000, the maximum loan they can obtain is S$3,000.

2. Second, your Credit Bureau Score

The second most important thing that many lenders see is your Credit Bureau Report. Here’s a quick guide to understand your credit bureau report.

While there are many things to look at the report, the 3 things that can determine your eligibility are:

Overall Grade
Presence of default or bankruptcy
Absence of score

Maximum Loan quantum

Factors	Banks	Licensed Money Lender
Overall Grade	Min DD and above	No restriction
Presence of default or bankruptcy	Not eligible	Not eligible
Absence of score	Typically not eligible	No restriction

3. Third, interest rates

As you can see, banks present a significantly cheaper option with rates ranging from 6-8% p.a. (EIR). Licensed money lenders on the other hand charge monthly interest rates and can go up to 4% per month. This is a upper cap regulated by Monetary Authority of Singapore (MAS).

Banks	Licensed Money Lender
6 – 8% p.a. (EIR)	1 – 4% per month
1.5% processing fee	2.5 – 7% processing fee

Understanding Interest Rates
When comparing personal loans in Singapore, you may have realized that each loan has at least two different interest rates.

Effective Interest Rate (EIR)	Annual Percentage Rate (APR)
The effective interest rate, or EIR, must be stated alongside the advertised rate in Singapore. This includes processing and other costs, as well as the specifics of your repayment plan. In a nutshell, EIR displays the personal loan’s “actual” interest rate as it takes into account the compounding of the interest as you make your repayment.	The yearly interest earned by an amount charged to borrowers or paid to investors is referred to as the annual percentage rate (APR). APR is a percentage that indicates the real annual cost of money for a loan or investment over the period of the loan. This includes any fees or other expenditures incurred throughout the transaction, but does not include compounding.

4. Figure the tenor.
One of the great benefits of banks is that they can lend for an extended tenor up to 5 years which significantly reduces your monthly instalments. As for money lenders, because interest rates are almost 3-4x, it seldom makes sense for a loan to go past 2 years.

Banks	Licensed Money Lender
Up to 5 years	Up to 24 months

Understanding Interest Rates When comparing personal loans in Singapore, you may have realized that each loan has at least two different interest rates.

In Summary

The choice between banks and licensed money lenders is not entirely obvious for personal loans as there is a gap that money lenders are able to fill that traditional banks cannot. While banks are the preferred choice in most scenarios, here’s 3 scenarios you want to go with a money lender.

Your income is less than $20,000	You do not have a good CBS record	You need a larger quantum but earn less than $40,000
Licensed Money Lenders can provide loans up to $3,000	As long as you are not in default, licensed money lenders are still open to providing credit	While most banks can only extend up to 2 times, Licensed money lenders can lend up to 6 times your monthly income

Why get other Financing Funding through Beez Rev?

A team that will support you

We have a dedicated team that will walk you through your entire loan process and help you do the market research you need.

We let lenders compete for your loan

Be ready to be spoilt for choice when we help you compare the best deals across all banks and non-banks so you only get the lowest interest rate and the highest cash out amount. Our rates are same as what the banks can offer or even better.