How to Pick the Right Bank for Your Business Loan

Finding the right bank for your SME is a big deal; whether it’s a small loan or a big one, it’s the start of an important relationship that will likely last for many years to come. With all that pressure comes a fair deal of stress, after all, the bank you choose first is often the bank you’ll stay with. Let’s break it down and go over the top 10 tips to help you find the best bank for you in Singapore.

Location, Location, Location

Once more, location. We’re starting off with this one because it’s sometimes overlooked, despite its huge importance. If everything goes well, you should have your hands full with running a successful business.

But if you’ve chosen a bank that’s a 45 minute commute each way no matter the time of day, that’s a huge loss of productivity for you and your business. If you are in XXXX, you might not want to travel to XXX all the time.

Consider how often you’ll need to visit the bank to draw out cash, have meetings, or have cheques cashed or issued. If you’re going to need to visit more than once a week, make sure they are close by to save you time and money.

On the other side of the coin is travel. If you need to travel outside of Singapore often for business, make sure the bank can handle your required services when you are out of town.

Get on Top of Your Credit Score

Sometimes, you’re just a number. And like it or not, a bank usually sees you that way too. And that three digit number is your credit score.

Banks can usually be quite picky about what businesses they give loans to, and your credit score is the first thing they look at, and often the last thing they look at too.

To really ensure that you get the banks competing for your business, make sure your business’s credit score is as good as possible. If you’re financing your business through a personal loan, Singapore banks will check your personal credit rating too.

If you haven’t already started to improve your business’s credit score, Do These 6 Things to Quickly Improve Your Credit Score in Singapore.

Bigger Isn’t Always Better, but Size Does Matter

You’ll need to spend some time thinking about whether you want to go with a small bank or a big bank.

The big banks like XXXX and XXXXX have more branches you can visit both inside and outside of Singapore, more resources, and more offerings for your business.

Smaller banks like XXXX  are sometimes more tuned into the realities of the local market, and also might be more willing to look at you as more than just a credit score. They may well also be hungrier for your business and be compelled to offer you a better deal if it means a long-standing relationship with a new business.

Perhaps above all, spend time talking to the people that could be your potential bankers. Because your future relationship with them is so important, it pays (literally) to find someone that you have a good rapport with. That way, when you accidentally miss a payment of some sort, you have a better chance of being forgiven for your transgression.

What Banking Services Will Your Business Need?

Loan Options

Let’s start with the reason we’re here, finding a business loan. Each of the banks offer different types of loans, some with more options than others.Take a look at what some of the current offerings are, and see what would meet your business’s needs.

Other Banking Service Options

Additionally, most banks, no matter the size, will offer all of the other basic services you need for your business:

• Online banking
• Credit card/debit cards
• Chequing accounts
• Savings accounts
• Employee chequing accounts
• Cheques and cheque books
• Deposit only cards

Consider what benefits each bank offers for each service. For example, you’ll be using your chequing account a lot, so will the bank offer you no/low chequing fees?

You might also however need one of the following services:

Lending Services

• Lines of credit
• Equipment leasing
• Commercial real estate

Cash Management

• Merchant services
• Wire transfers
• Wholesale lockbox

Miscellaneous

• Payroll
• Import/export
• Insurance
• Retirement accounts

Discuss your needs with the bank before you get your loan. It would be a huge disappointment if you got your loan approved, but found out later they didn’t offer a service crucial to your needs.

Figure What the True Costs Are Beyond the Interest Rate

Business loan interest rates will vary depending on the bank, and the terms of your loan. But there will also be administration costs that the bank will put on top, for processing your business loan.

Take a look at what the rough interest rates for working capital loans are for each bank right now, but pay attention to the column on the right — that’s the extra fees each bank will charge, and sometimes it can amount to a significant sum.

Skip the Queue and Have the Banks Come to You

There are no shortage of banks in Singapore, and traditionally, you’d want to visit each and every one of them in person to see what they have to offer you and your business.

That of course, takes a lot of time. Like really, a lot of time.

Thankfully though, there are now digital platforms like SMEGuru that can have the banks actually come to you with loan offers.

Not only that, they will compete for your business, as they are all working through the same platform to get you to borrow from them.

No more trudging around Singapore, you can get your business loan from the comfort of your lounge chair.

Relationship with Benefits

Banks are often in hot competition to get the best customers, and sometimes a simple low interest rate isn’t enough to lure potential borrowers from other banks.

This is when they will roll out the red carpet of perks, like air travel, hotel accommodation, or even free appliances.

It all sounds lovely, but keep your eyes on the prize here. You are out to get the best deal for your business, not a free microwave. Ask the bank what they can offer beyond the loan itself, and how that could help your business. They might be able to offer payroll services, reduced insurance rates, or help with your tax obligations.

This is also a good question to ask if you can’t choose between two banks.

Ensure Your Digital Freedom

Lining up at the bank is so last century, as thankfully the banking industry has leapt full steam ahead into the digital era.

If you value your digital options, such as banking from your mobile phone, or anywhere else in the world for that matter, ask the bank what their digital offerings are.

You might consider some options nice to have, but others will absolutely be must-haves for your business.

In the End, Go with Your Instincts

After all of the previous considerations are said and done, you might still be torn as to what bank to pick. If it’s a razor-thin choice between two banks, trust your gut.

Think about the bank and the people in it, and whether they have a genuine desire to help you and your business succeed.

Beyond all of the numbers, it’s the people in the bank that will mean the most for your business’s prosperity.

We hope that you now have a better understanding of how you can pick the best bank for your business loan as well as your overall business banking needs. If you have any questions about getting a loan for your business in Singapore, please do contact us, and we’ll make it a priority to help you out as soon as we can.