Aside from having a solid business idea, starting a business in Singapore will require you to have sufficient funding to keep your business up and running. One of the challenges of setting up a business, especially smaller ones, is gaining access to capital.
Fortunately, the business financing landscape is rapidly changing and is starting to offer more convenient financing options for new entrepreneurs. Here are a few alternative business financing options that you might want to consider to aid you in kick starting your new endeavor. If you have your business up and running, remember that a proper bookkeeping can be helpful in maintaining the financial health of your business. Here are 6 Accounting Tips for Start-ups.
1. Online Lending / Peer-to-Peer Lending (P2P)
Peer-to-peer lending, also known as social lending, enables an individual to bypass banks or other traditional intermediaries and secure a loan directly from individual investors. This type of arrangement is more popular in US and UK and on its infancy stage in Southeast Asian markets such as Singapore. Online lending sites such as Capital Match targets SMEs in Singapore, providing them with loans amounting from SGD 50,000 up to 200,000 for a term of 3 to 12 months.
Ease of approval
Like any other loan, credit evaluation is also done in P2P lending prior to loan approval. The only difference is that borrowers have a greater chance to be approved in P2P lending as compared to loan application in banks or other financial institutions. Moreover, individuals with less than impeccable credit scores still stand a chance, since approval will be at the lender’s own discretion.
Banks and other lending institutions charge numerous fees for a loan application, such as application fee and processing fee. More often than not, these types of fees are not applicable for P2P lending since this type of loan is not institutionalized.
Quick access to funds
It would take a couple of days, or sometimes even weeks before borrowers could gain access to loan proceeds from traditional financing companies. Through P2P lending, borrowers can get and utilize business funds as early as the day they applied for it.
2. Credit Cards
Corporate or business credit cards are steadily gaining popularity among entrepreneurs. It is one of the most readily-available sources of funds that does not require a collateral. When used wisely, credit cards can be of great help especially for startup companies.
Serves as a way to track and control business expenses
Credit card holders receive a billing statement or spend report at least once a month. Furthermore, this aids in keeping track of all expenses that are incurred on a specific time period. This is also a helpful way in keeping personal and business spend apart since business credit card transactions are conducted on a separate credit line.
Quick way to disburse funds
Paying with credit cards is quicker and more convenient than issuing checks or paying with cash especially for large ticket transactions. Nowadays, transactions with business suppliers can already be paid for online or over the phone, eliminating the need to physically collect cash or go to the bank for check encashment.
Easy way to establish positive credit ratings for your business
Having a high credit score or positive ratings can boost your company’s chance to avail of other loan products. Using a credit card and paying bills on time will reflect on your company’s track record especially during credit evaluation.
Crowdfunding works by pitching an idea that requires funding and pooling sufficient funds from pledges made by individuals who vouch for your business concept. Like P2P lending, crowdfunding initially started in US and Europe but is now available in Singapore and other Asian countries through crowdsourcing sites like Crowdo.
No debt will be accumulated
In crowdfunding, there is no need to repay investors. In most crowdfunding platforms, a simple recognition and giving of tokens or your actual products will suffice to show gratefulness and appreciation to project contributors.
Serves as a channel for market validation
In crowdfunding sites, you will be required to provide potential contributors with an introduction to your business idea and the products/services that you will offer. Through this activity, you can easily gauge the reaction of consumers that will serve as an indicator if your business idea fits the consumer mindset.
At this day and age where almost everyone on the globe is connected, simple creativity and resourcefulness go a long way in starting a business. Through alternative financing options, aspiring entrepreneurs now have more access to flexible options that will surely help in making businesses grow and flourish.