Smart Funding for Small Businesses

August 3, 2022
the INFT team

As reported by CNA, more than 40,000 small businesses were thrown into a financial crisis during the COVID-19 pandemic, especially those in the supply chain. Singaporean businesses, however, have been on the receiving end of up to $10,000 aid recently in grants to help the companies get back up on their feet. 

The hardest hit industries were the supply chain, F&B, retail, tourism, and hospitality sectors. Many Singaporean businesses were looking for viable supply chain financing, invoice financing facilities, and ways they can get into invoice factoring.

If you’re one of the small businesses in Singapore who is also trying to get back up to hustle mode, you may also be looking for ways to secure funding, especially if you’re a newly set-up startup. 

There are several options available to help you scale and grow your business. However, before you go ahead and take out a small business loan or apply for grants from the government or even approach an angel investor, it's important that you understand what each of these options entails and how they work.

Small Business Facing Obstacles to Securing Funding

Traditional financial institutions and banks have set rules and regulations when deciding whom to offer their small business loans to. Oftentimes, small startups don’t make the cut because there’s lack of data, credibility, and history. So, it’s indeed true that Banks are sometimes unwilling to provide small business loans to new companies. 

A good alternative would be for these companies to find Singaporean business loan companies that are willing to lend a helping hand to the local business communities. INFT is one such example, having risen the ranks in recent years as one of the fastest growing Fintech companies in Asia.

Crowdfunding is a good option if the option is available because crowdfunding is in a grey area. There is currently no legislation or authority in place to govern the practice of crowdfunding in Singapore. The main reason for this is because of problems with accountability, transparency, and veracity. 

However, it is noted that most crowdfunding platforms conform to an adopted Code of Practice for Online Charitable Fundraising Appeals pledge. Platforms like Kickstarter and Indiegogo are popular, regardless of where the company is located. 

All is well if it works because government loans and grants are not always available, either; check out Go Business’ website to see if there are grants or loans you can apply for.

Finding Funding Alternatives to Traditional Banks

Projects and business ideas are sometimes trashed, wastefully so, because they lack the funds to fuel the project forward. So, if you can’t get a small business loan from your bank, don’t get discouraged. You are not alone. 

Banks are often reluctant to lend money to small businesses because of the risk involved and most business loans offered by these financial institutions require some form of guarantee or collateral.

This doesn't mean that banks won't help you at all - it just means that they'll want some form of assurance before handing over the cash. Here are some things that may be holding back your application:

  • Your business has no credit history or previous experience, which makes it hard for the bank to assess your risk level.
  • You don't have enough assets (like property or machinery) on hand to secure the loan in case of default.
  • The bank thinks there's too much competition in your industry and therefore a low chance of success (this is especially common with startups).

Microloans, Invoice Discounting, and Merchant Financing 

Micro Loans or short-term loans which are usually offered by banks, financial institutions and fintech companies like INFT as a form of quick business loan for distributors and business financing for manufacturers in the supply chain. The purpose is to tide the companies over with an injection of funds, usually to the tune of USD$1,000 to USD$50,000. 

INFT offers a fuss-free way to get SGD150,000 of business financing because we know what it means to help people who may be facing cash flow problems. 

On top of that, we have designed an ecosystem of supply chain financial solutions that will provide a small-change sense of order whenever there are supply chain disruptions, like the one the world recently changed. It includes invoice factoring, supplier financing, and cash injection for manufacturers and distributors.

Government Loans and Grants for SMEs and New Startups

Although not impossible, government business loans and grants won’t come across easily for startups, small businesses, SMEs, and small family-run businesses. This is a jarring gap in the financial industry. They simply don’t qualify for government loans and grants because the focus would often be on larger and more established businesses because they have more assets, accomplishments, accreditation, capital, and clout. 

The application process is also tedious, sometimes unwarranted and irrelevant, and sidelined. It could take weeks or months to hear anything back from them - regardless of whether the feedback is positive or negative. Throughout the year, the few openings for such government grants and financial assistance are few and far in between so, small companies would often seek out other forms of funding. 

Before You Go…

Funding your business can be difficult, but there are plenty of ways to secure it. There are many online platforms that will help you seek funding from investors and angel investors, one good example would be INFT. Our checks are often faster, quicker, and we rely on alternate data instead of the usual flurry of data and documents.

INFT believes in helping small and medium sized businesses realise their dreams based on the projection of their ideas, business potential, credibility of the team, technology, and recent transaction history. 

Find out more about our invoice discounting facility if you’re in the supply chain or if you need a quick cash injection, speak to our agents now to get the process going.

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