How a term loan can work for your SME
A term loan can be a great option for your business if you’re making an investment, taking advantage of a business opportunity, or funding a period of rapid growth. Here’s how to make the most of one:
1. Grow your business
One of the best and most common uses of a business term loan is to grow your business. For example, you might need to stock up on inventory for a period of traditionally higher sales. If you run a retail or F&B business, growing your business might entail opening a new location to expand your customer base. In general, if you expect to reap significant returns on an investment, taking out a term loan would make good financial sense.
2. Expand your product line
If your company has been doing well selling one or a couple of flagship products, it might be time to consider expanding your product range – whether as a follow-up to your original product, or to cater to a different market segment. Taking out a business term loan is a convenient way to fund your product development, and could help give your business a significant boost if your new products take off. The bottom line: it’s important to assess if the potential returns are significant enough to justify the risk.
3. Hire new employees
If your business could benefit from new hires with specific expertise, a term loan could help you bring necessary staff on board. Whether you’re looking to hire a marketing expert, a sales specialist or simply extra pairs of hands for a new business location, a term loan could help you address immediate manpower needs even during periods where your cash flow might be tight.
4. Refinance existing debt
One of the key benefits of a business term loan are the relatively lower interest rates compared to other forms of financing. DBS offers a business term loan which allows you to borrow up to $500,000 over a five-year period. If, for example, you have been paying for supplies or other vendor services on a business credit card, it might be cheaper to pay off your credit card debt with a term loan so as to avoid higher interest rate charges. DBS’ business term loan is a collateral-free loan, which means you won’t have to put your assets on the line when borrowing either.
5. Pursue a passion project
If the daily grind is getting you down, consider pursuing a passion project – something you’ve always wanted to do in your entrepreneurial journey. It’s especially worth doing this if your project can help you engage with your existing customers, or even attract new ones. Whether it’s running a campaign with a social cause, running a business pop-up or even launching a limited-edition product range, a term loan could help make your vision a reality.
Log on today to apply for a DBS Business Term Loan. You’ll need to have supporting documents – such as your financial and bank statements, as well as your personal notice of assessment and NRIC, to apply.
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