People are more familiar with applying for personal loans from a financial institution, including a bank, a moneylender, or a credit company in Singapore. Personal loans can be used for travelling, hospitalisation, paying off other debts, and home.
A business loan in Singapore is quite different. Unlike a personal loan, a business loan is strictly for business only. It aims to help companies with their operations and expansion.
Here’s how you can spend your business loan:
1. Buy new equipment
Many businesses rely on machinery. You can use a business loan to buy new machines for your factory. But why do companies need to buy equipment?
Firstly, they are expanding. For example, a bread factory can only produce 100 croissants a day, but the demand for their bread is 200 pieces daily, the factory needs to purchase other equipment to meet the demand.
Secondly, they are upgrading. Factories upgrade their equipment to maximise productivity. For instance, the old machine can produce ten pieces of bread per hour, while newer models can produce twenty pieces of bread per hour. It increases the productivity rate by 100%.
Factories also upgrade their machinery to meet safety standards. Old equipment may not be as safe and efficient as the newer models. You can apply for a business loan from a credit company in Singapore.
2. Supply replenishment
Businesses can also use the business loan to replenish their supply. For example, when the bread factory is running out of flour, yeast, or salt, and they have no enough money to fill their inventory, they can use the business loan to buy supply replenishment.
It typically happens when peak season is approaching. During the peak season, the demand for products increases significantly. Therefore, the factory should have enough ingredients to supply the demand.
3. Facility improvement
When the bread company grows, it may need additional facilities for its product. They may rent a new warehouse or build their own at another location. Or they may extend their factory to make room for a warehouse. Unfortunately, you can’t use the home renovation loan in Singapore for this purpose.
Companies also use their business loan for daily operation expenses, such as employees’ wages, fuel, electricity, water, rent, and more. If entrepreneurs fail to sustain their daily operations, the business can fail. By then, the entrepreneur may need a debt consolidation loan in Singapore to pay off piled-up loans to keep the company afloat.
Do you need a business loan, personal loan, or payday loan in Singapore? Visit Monetium Credit for more information about these loans.