It’s never a good feeling, seeing a letter that begins with, “We regret to inform you…” or answering a phone call to hear, “I’m sorry, but you’ve been denied.” Securing an SME loan in Singapore for your business can be nerve-wracking enough, so finding out your application has been denied is a moral letdown (and a financial one, too.)
But hindsight is 20/20, as they say, so it’s best to take a look at just what happened to see where everything went wrong in your SME loan application.
I went to a bunch of different banks.
There are lots of different banks and financial institutions serving the SME financing segment, and all of them have different credit criteria and risk appetite — and you may not have been able to tell which banks were right for you. So, like a lot of people, you went to every bank you could find.
This approach, unfortunately, often leads to a lot of wasted time and resources speaking with banks that are not suitable for the company profile. Some banks even shun certain industries, like food & beverage or construction, whereas other banks might be welcoming to those very same industries!
I only paid attention to my company’s credit standing.
Did you assume that your business financing applications would be assessed solely on your company’s credit standing? You are in for a surprise: most banks actually assess the business owner’s personal credit profile when processing a loan application.
A tardy repayment record on your personal credit cards may have been detrimental to your business financing application, no matter how stellar your company’s financial performance looked. There are, of course, some other factors that an experienced SME financing consultant could present to banks to mitigate this issue.
I didn’t check my banker’s lending limit.
You may have already had a banker. And, as your company grew, bigger projects may have necessitated more financial support. Unfortunately, most banks have a cap on financing limits, and SMEs may find that applications to their existing bankers are rejected due to the maximum limits imposed. An SME consultant would advise that small business owners seek out other banks to diversify credit sources should growth opportunities arise.
I didn’t really understand my financials.
Most business owners are so immersed in the day-to-day operations of their companies that the accounting books are left under the supervision of others (or, worse, to gather dust in a filing cabinet). Banks often place heavy emphasis on a company’s financial report during the credit assessment, and poor financial figures usually lead to a number of rejections.
SME financing consultants are able to conduct initial assessments on a company’s financials to determine eligibility and gather relevant information. They have the expertise needed to mitigate weakness in financial ratios when presenting credit proposals for applications.
If you didn’t do any of the above, then something else went awry in the loan application — and an SME consultant can review your case to see what happened, and help you secure a SME loan in the future.