Nothing beats the joy of launching a business after months, or even years, of planning. But in Singapore, like in most places, starting a business is no walk in the park, especially when you need certain equipment to get it running.
You’ve got the killer idea, the drive, the passion – but sometimes, that initial capital can feel like a mountain to climb over. Especially when that fancy new gizmo you need seems to have a price tag that reads like a phone number. In these situations, equipment loans can be your savior.
Before you get into loan application, take a quick look at some of the common mistakes entrepreneurs make so you can avoid them.
We Singaporeans are notorious for being a little kiasu (afraid to lose) sometimes. Especially when it comes to loans, we might just grab the first offer that comes our way. But there are tons of licensed money lenders online out there, each with their own interest rates, repayment terms, and eligibility criteria. Don’t be kan cheong (anxious)! There are surprise gems you might find if you take some time to browse through your options!
Underestimating the true cost
Who doesn’t love a good deal? Literally no one! When you are approved for a huge loan amount, do you just cash it out? No! Equipment loans, like most loans, are associated with processing fees like processing fees or early repayment fees. So, getting tunnel vision in these situations is not ideal. Factor those in if you don’t want to get caught short later!
Borrowing more than you can chew
We get it – dreaming all the amazing stuff you can do with that new equipment. No more delays hopefully! No more calling technicians, we hope! Now, getting swept in all these may cloud your judgement. If there is a way to go, then it’s being realistic about your business’s current cash flow and future projections. Are you comfortable with paying monthly on a hefty loan? Can you? If not, then don’t overextend yourself. Slow and steady wins are the best types of wins out there!
Not understanding the loan terms
Don’t be like those many people who just skip through loan agreements, sign the fine print and call it a day! You will be signing a legally binding document. We’re stating the obvious here but just take some time to understand the details (interest rate, repayment schedule, and potential penalties) and ask away if there’s something you don’t understand.
Not considering the loan terms
Equipment loans are not the only option. Maybe a short-term equipment lease can tide you over until your business picks up. Could you negotiate a longer payment term with the equipment supplier? Exploring all your financing options can save you money and give you more flexibility.
Conclusion
A good credit score can significantly impact the loan terms you qualify for. So, pay your bills on time, avoid unnecessary debt, and generally be a responsible borrower. Equipping your business is a crucial step, and equipment loans can be a powerful tool. But by avoiding these common mistakes, you can ensure you’re getting the best deal possible and setting your business up for long-term success.
