Different Ways of Getting Business Financing in Singapore

It costs money to start a business in Singapore. Funding your business is one of the first — and most important — financial choices most business owners will have to make. How you choose to fund your business could affect how you structure and run your business effectively.

Determine How Much Funding You’ll Need

Every business has different needs, and no financial solution is one size fits all. Your personal financial situation and vision for your business will shape the financial future of your business. Once you know how much business financing you’ll need, it’s time to figure out how you’ll get it.

Fund Your Business Yourself

Otherwise known as bootstrapping, self-funding lets you leverage your own financial resources to support your business. Self-funding can even come in the form of turning to family and friends for capital.

With self-funding, you retain complete control over the business, but you also take on all the risk yourself. Be careful not to spend more than you can afford and be especially careful if you choose to use tap into your reserves early. You might subject yourself to uncalculated consequences and damage your ability to retire on time — so you should check with your personal financial advisor or your business partner(s) first.

Get Venture Capital from Investors

Investors can give you funding to start your business or accelerate your business growth in the form of venture capital investments. Venture capital is normally offered in exchange for an ownership share and active role in the company.

Venture capital differs from traditional financing in a number of important ways. Venture capital typically:

  • Focuses on high-growth companies
  • Invests capital in return for equity, rather than debt (it’s not a loan)
  • Takes higher risks in exchange for potentially higher returns
  • Has a longer investment horizon than traditional business financing

Almost all venture capitalists will, at a minimum, want a seat on the board of directors. So be prepared to give up some portion of both control and ownership of your company in exchange for funding.

Use Crowdfunding to Fund Your Business

Crowdfunding raises funds for a business from a large number of people through their platform. Crowdfunding platform is the alternative way of getting your business funded. Over the years, with advancement of technology, many investors now looked onto crowdfunding platforms as a source of investment to diversify their portfolio.

Crowdfunding has become popular because “sky is the limit” when it come to borrowing for business owners. Not only do you get to retain full control of your company, the timeframe to get your business finance is faster than traditional bank loan applications. Every crowdfunding platform is different, so make sure to read the fine print and understand your full financial and legal obligations.

Get a Working Capital Loan

Since the introduction of the supplementary budget by Singapore DPM cum FM, Mr Heng Swee Keat, the increased risk-sharing by the Government due to the CoVid-19 outbreak have made the Financiers make necessary adjustments on the application criteria.

To increase your chances of securing a loan and to win the battle against this fight, you should have a business plan, expense sheet, and financial projections for the next three years. These tools will give you an idea of how much you’ll need to ask for, and will help the bank (if requested) to know they’re making a smart choice by granting a loan to you.

You might consider engaging a loan consultant to assist you in devising the fund your business will need through a financial analysis as the time taken to do up these documentation may cause too much time.

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