Sound business loan proposals require you to see via the ‘banker’s eye’

At some point in their life, most small businesses will go to a bank or other lending institution with what they believe to be sound business loan proposals to borrow money for expansion of their operation. Many small business owners, however, initially fall victim to several of the common and potentially destructive myths that concern applying for loans. You should always do your own research.

By: Phoenix Lee/

Myths concerning applying for a loan

For example, first-time borrowers commonly believe:

  • Lenders are lined up and eager to provide money to small businesses.

  • Banks are willing sources of financing for start-up businesses.

  • Loans are obtained by talking the lender out of funds.

  • When it comes to seeking money, the company speaks for itself.

  • A bank, is a bank, is a bank, and all banks are cold, impersonal institutions.

  • Banks, especially large ones, do not need and really do not want the business of a small firm.

Research shows that 67 per cent of all small businesses that borrow money get that money from commercial banks. This places banks among the largest sources of credit; and makes them one of the most vital components to small business survival. Understanding what your bank wants and how to properly approach them with sound business loan proposals can mean the difference between getting your money for expansion and having to scrape through finding cash from other sources.

The name for people who simply walk into a bank and ask for money is “Bank Robbers”. To present yourself as a trustworthy businessperson, dependable enough to repay borrowed money, you need to first understand the basic principles of banking.

Your chances for receiving a loan will greatly improve if you can see your proposal through a banker’s eyes and appreciate their position. Banks have a responsibility to government regulators, depositors, and the community in which they are in. While a bank’s cautious perspective may be irritating to a small business owner, it is necessary in order to keep the depositors money safe, the banking regulators happy, and the economic health of the community growing.

Banks differ in the types of financing they make available, interest rates charged, willingness to accept risk, staff expertise, services offered, and in their attitude toward small business loans. Selection of a bank is essentially limited to these choices. Furthermore, a bank will typically not make business loans to any size business unless a current account or money market account is maintained.

Ultimately, your task is to find a business-oriented bank that will provide the financial assistance, expertise, and services your business requires now and is likely to require in the future.

A good loan specialist will be able to assist you in deciding which bank will best suit your needs and prepare sound business loan proposals.

As such, you should devote time and effort to building a background of information and goodwill with the bank you choose, and get to know the loan officer you will be dealing with early on. You should also build a favourable climate for a loan request long before the funds are actually needed. The worst possible time to approach a new bank is when your business is in the throes of a financial crisis. That is like walking into a funeral parlor carrying a body.

Remember that bankers are essentially conservative lenders with an overriding concern for minimising risk. Logic dictates that this is best accomplished by limiting loans to businesses they know and trust, and to those who make sound business loan proposals.

Experienced bankers know that every firm encounters occasional difficulties; a banker you have taken the time and effort to build a rapport with will have faith that you can handle these difficulties. A responsible reputation for debt repayment may also be established with your bank by taking small loans, repaying them on schedule, and meeting all facets of the agreement in both letter and spirit.

By doing so, you gain the bankers trust and loyalty. He or she will consider your business a valued customer, favor it with privileges, and make it easier for you to obtain future financing.

Lending is the essence of the banking business and making mutually beneficial loans is as important to the success of the bank as it is to the small business. This means that understanding what information a loan officer seeks, and providing the evidence required to ease normal banking concerns, is the most effective approach to getting what is needed.

Sound business loan proposals should contain information that expands on the following points:

  • What is the specific purpose of the loan?

  • Exactly how much money is required?

  • What is the exact source of repayment for the loan?

  • What evidence is available to substantiate the assumptions that the expected source of repayment is reliable?

  • What alternative source of repayment is available if management’s plans fail?

  • What business or personal assets, or both, are available to collateralise the loan?

  •  What evidence is available to substantiate the competence and ability of the management team?

Even a brief examination of these points suggests the need for you to do your homework before making a loan request. It is a virtual certainty that an experienced loan officer will ask probing questions about each of them. Failure to anticipate these questions, or to provide unacceptable answers, is damaging evidence that you may not completely understand the business and/or are incapable of planning for your firm’s needs.

How to Secure Personal Loans Quickly

If you have limited capital and are searching for personal loans to expand your business, the loan consultants at iCompareLoan can set you up on a path that can get you a it in a quick and seamless manner. Our loan consultants have close links with the best lenders in town and can help you compare various loans and settle for a package that best suits your needs. Find out money saving tips here.

Our Affordability Tools help you make better property buying decisions. iCompareLoan Calculators help you ascertain the fair value of a property and find properties below market value in Singapore.

If you are looking for a new home loan or to refinance, our Mortgage brokers can help you get everything right from calculating mortgage repayment, comparing interest rates all through to securing the best home loans in Singapore. And the good thing is that all our services are free of charge. So it’s all worth it to secure a loan through us for your business expansion needs.

Contact us for advice on a new home loan.

Contact us for home loan or refinancing advice.

Home based business financing can be challenging but not impossible

By: Hitesh Khan/

Running a home-based business can be a profitable and enjoyable way to make a living. But before you consider applying for home based business financing to expand your business, it is important to have an ironclad idea, some form of collateral, investors (in some cases) and a long-term plan for success.

1. Pull a copy of your credit report. A lender will not grant a small business loan to any potential borrower with poor credit.

Credit scores are major considerations on personal loan applications. The higher your score, the better your approval chances.

A credit score is a number that the lenders consider for home based business financing.

It is a joint effort between all the major lenders here, where data about consumers’ credit history is pooled together and aggregated. Within the aggregated data, lenders would have access to records that show the number of accounts that you have across different banks, and your payment history.

After crunching the available data, each account holder is then assigned a credit score. This indicates how good or bad of a risk you might be to the lender as a customer. The higher the number (up to 2,000 and AA rating), the better your credit score.

Although the the exact weightage of how your credit score is calculated isn’t public knowledge, the factors that the Credit Bureau of Singapore (CBS) uses in determining your credit score is.

Factors like usage patterns of loan facility (e.g. if you have been making large purchases or transactions lately); your recent credit account activity (The number of credit facilities an account holder has is considered by banks as liabilities as they may perceive that you are over-extending yourself); and your account delinquency data, or how you have fared as a customer (this means where possible, always avoid making late or partial payments for your facilities).

Other factors considered by CBS include your credit account history, or how long you have been a customer (factors like if you have you been a loyal customer of your bank since you received your first credit card from them); how much available credit do you have (your credit score is affected by the number of accounts you have with various banks in Singapore); and enquiry activity of how many organisations have asked about you (having too many enquiries might indicate to banks that you could be taking on more debt than you should).

2. Collect all of your documents and do a self-analysis. Put yourself in the lender’s shoes – decide how strong a credit risk you are. Positive attributes of a successful business loan borrower include strong assets (house, investments), existing investors (either angel investors or venture capitalists), strong cash-flow from an existing business or other career and a unique business idea with a clearly defined customer market.

3. Research lenders. If you do not have the time to do research, seek the services of a loan specialist for your home based business financing. The loan specialist is not a direct lender but instead contracts with private lenders to provide small business loans to consumers. A prospective lender is looking for a profitable loan and will scrutinize your application quite carefully.

Be sure to provide the loan specialist your present personal bank statements, business bank statements and a clear one-page report on the thrust of your home-based business, its prospective customers and your ideas for long-term sustainability and growth.

4. Make sure your documentation is all in place. Although it varies slightly from lender to lender, a small business loan package usually comprises several documents, including a loan agreement, a promissory note and some form of guarantee and surety agreement.

The loan agreement will contain what are commonly known as “representations and warranties” of the borrower. These provisions serve as your promise to the bank that you’ve complied with certain conditions. The bank will ask you to affirm, that you’re authorised to bind your business to the loan terms. You may also be asked to deliver your business’s financial reports for review, either annually or quarterly, for a term specified in the loan agreement.

Generally, it’s a good idea to get the loan documents ahead of time so you have a chance to review them for a couple of days before you sign them. Most lenders won’t have a problem sending advance copies of the documents, but they will generally only do so if they’re specifically asked.

The documents can be somewhat complex – which is why you may need an independent loan specialist to help you understand what the fine print means.

5. Make sure that all approved loan offers meet your original needs. Obtain copies of all approved small business loans and compare the final terms to your original idea.

Make sure the capital sufficient home based business financing to fund your start-up.

Make sure you can make the monthly payments and make sure the business idea is still viable. For example, if another business owner has entered the market you had hoped to penetrate with a similar idea, you’d be wise to revisit your business plan before accepting any loan funds. If it seems as though your customer market is still there, proceed with the loan. However, if your plan is in jeopardy due to the new business, it’s best to refuse any loan and go back to the drawing board.

How to Secure a Personal Loan Quickly

If you have limited capital and are searching for a personal loan to expand your business, the loan consultants at iCompareLoan can set you up on a path that can get you a it in a quick and seamless manner. Our loan consultants have close links with the best lenders in town and can help you compare various loans and settle for a package that best suits your needs. Find out money saving tips here.

Our Affordability Tools help you make better property buying decisions. iCompareLoan Calculators help you ascertain the fair value of a property and find properties below market value in Singapore.

If you are looking for a new home loan or to refinance, our Mortgage brokers can help you get everything right from calculating mortgage repayment, comparing interest rates all through to securing the best home loans in Singapore. And the good thing is that all our services are free of charge. So it’s all worth it to secure a loan through us for your business expansion needs.

Contact us for advice on a new home loan.

Contact us for home loan or refinancing advice.

Non conventional personal loans for small businesses who need a boost

By: Hitesh Khan/

When your business is struggling and you need additional funding to tide over a tough patch, then you will find that your access to funding is completely cut off and end up with very expensive funding.

But there are many options available for small business owners searching for non conventional personal loans to give their businesses the much needed boost.

Angel Investors

An angel investor or angel is an affluent individual willing to invest in a company at its earlier stages in exchange for an ownership stake, often in the form of preferred stock or convertible debt. Whether you decide to seek an angel investment depends on your personal management style and the long-term plans for your company. Unlike a bank loan or other types of debt financing, equity capital gives someone else an ownership interest in your company.

Credit Co-operative Societies

Co-operative Societies (Co-ops) are associations of people who voluntarily band together to achieve a common social or economic aim by forming a jointly-owned and democratically controlled business organisation. Co-ops operate on principles of self-help and mutual assistance, and most co-ops have social missions to benefit the society at large. Co-ops in Singapore are regulated by the Registry of Co-operative Societies, under the Co-operative Societies Act (Chapter 62) and Cooperative Societies Rules 2009. Credit co-ops provide financial services to their members who are within a pre-existing common bond of association or community of interest.

Crowdfunding

Crowdfunding describes the collective effort of individuals who network and pool their money, usually via the internet to support efforts initiated by other people or organizations. Crowdfunding has its origins in the concept of crowdsourcing, which is the broader concept of an individual reaching a goal by receiving and leveraging small contributions from many parties. Crowdfunding is the application of this concept to the collection of funds through small contributions from many parties in order to finance a particular project or venture.

Invoice Financing (factoring)

Factoring is a financial transaction in which a business sells its invoices to a third party at a discount. A business will sometimes sells its invoices to meet its cash needs. Factoring is commonly referred to as accounts receivable factoring, invoice factoring, and sometimes accounts receivable financing. Factoring is not a loan, it is simply selling outstanding invoices for cash.

Microlending

Micro loans are small business loans typically under $50,000. Micro loans are generally used for start-up cash but are sometimes given to newly launched small businesses for working capital. Micro loans can be used for many purposes including the purchase of equipment, inventory, machinery, fixtures, furniture, supplies, and even to purchase another business. Each lender will have their own requirements for repayment of a micro loan. Interest rates and collateral requirements vary considerably between lenders but almost all require a personal guarantee by at least one of the business’ owners.

Peer to Peer Lending

Peer-to-peer lending is the practice of lending money to unrelated individuals, or “peers”, without going through a traditional financial intermediary such as a bank or other traditional financial institution. This lending takes place online on peer-to-peer lending companies’ websites using various different lending platforms and credit checking tools.

Venture Capital

Venture Capitalists focus on companies developing significant innovations – be it a new piece of software, a life-saving cancer drug, or a new model for consumer sales. Unless the company is poised for significant growth, a VC won’t invest. Making investments at the earliest stages of a company’s development, often before a product or service is more than just an idea, involves significant entrepreneurial risk which severely limits capital sources for such companies. Yet, venture capitalists assume this risk alongside the company founders by providing capital in exchange for an equity stake in the company.

Startup Accelerator

Accelerator works with startups for a short and specific amount of time, usually from 90 days to four months. Accelerators also offer startups a specific amount of capital, usually somewhere around $20,000.

Licensed Moneylenders 

Moneylenders in Singapore have to be registered and licensed with the Registry of Moneylenders. Most moneylenders operate with the goal of offering instant cash loans to Singaporeans, Permanent Residents and foreigners in Singapore. Moneylenders offer fast, hassle-free and efficient services to their clients.

Licensed moneylenders are useful to people who may find it highly challenging to procure a significant amount of money in a short span of time.

Licensed moneylenders being providers of non conventional personal loans will simplify your application process thereby making the cash loan more readily available.

How to Secure Non Conventional Personal Loans Quickly

If you have limited capital and are searching for non conventional personal loans to expand your business, the loan consultants at iCompareLoan can set you up on a path that can get you a it in a quick and seamless manner. Our loan consultants have close links with the best lenders in town and can help you compare various loans and settle for a package that best suits your needs. Find out money saving tips here.

Our Affordability Tools help you make better property buying decisions. iCompareLoan Calculators help you ascertain the fair value of a property and find properties below market value in Singapore.

If you are looking for a new home loan or to refinance, our Mortgage brokers can help you get everything right from calculating mortgage repayment, comparing interest rates all through to securing the best home loans in Singapore. And the good thing is that all our services are free of charge. So it’s all worth it to secure a loan through us for your business expansion needs.

Contact us for advice on a new home loan.

How Money Plays A Part In Your Life by Jaspreet Singh

Ever wonder why so many people are scared to talk about money?
Like, why is “money” a taboo topic that you should avoid talking about at all costs?
Even though…if more people were open to talking about money, our society wouldn’t have as many financial problems as they do today.
It’s because the majority of people don’t understand how money plays a part in their lives.
So…they avoid talking about money at all costs.
And then, they try to make you feel bad for being money conscious.
I don’t want you to be one of those people. Don’t live in fear, live with understanding.
The goal in life is to be happy…Not rich.
If you want to live a great life, you have to be (in this order):
1. Physically fit
2. Mentally fit
3. Spiritually fit (having a purpose)
4. Financially fit
I call this my Quadrafit Theory…

The very first step is to become physically fit.
If you are not healthy your only dream will be to become healthy. Nothing else matters.
When you’re in pain or on your death bed – the only thing you want is to get better.
You don’t care about how much money you have, what vacation you have coming up, or how many friends you have.
You just want to be physically fit. That’s your one and only dream.
But when you’re healthy, you can have 1000s of dreams.
That’s why the first step is to become physically fit.
The second step to living a great life is to become mentally fit.
This is your mental health.
If you’re depressed & miserable, making lots of money will not fix the way you feel.
Actually..It will make you feel even more miserable.
That’s why mental fitness is the second step to living a great life…
You can’t use money to compensate for your lack of mental fitness.
Third, you have to be spiritually fit.
Don’t confuse being spiritually fit with being religious. These are two separate things.
Being spiritually fit means having a purpose in life.
If you lack a sense of purpose…you will feel empty.
It’s like living your life in black & white – you’re missing the color.
You need to know your purpose for living life.
Ask yourself, what’s your reason for waking up in the morning?
What drives you?
You weren’t born just to go to work, pay bills, and die. You were born to thrive.
Finally, at the top of the Quadrafit Triangle is financial fitness.
You can be super healthy, surround yourself with amazing people, and do something you love…but if you’re drowning in debt and struggling to pay your bills…
Your happiness will dwindle.
Things like…
1. Every time you go out with your friends, you’re worried about the cost of the bill.
2. You get into fights with your spouse because of their spending habits.
3. You dream of taking your family on nice vacations and buying nice cars, but you have no way of affording these things.
This is where being financially fit takes your life to the next level because it’ll let you live your life the way you want…financially.
And this is where money can buy happiness.
If you are fit in the first three parts of the Quadrafit Triangle (you’re physically healthy, mentally happy, and have a purpose), being financially fit means you can afford to do things you love.
Or hire someone to do things you hate…
• You can take your family on nice vacations
• You can hire people clean, cook, & mow the lawn
• You can travel in class, instead of on a budget
• You can buy healthier food & a better gym membership
• You can give to the organizations & charities you care about
• And you don’t have to worry about the price!
Your life is like a cake and money is the icing.
You can have a great cake (the bottom 3-layers of my Quadrafit Theory) but if the icing tastes like poo…suddenly, the cake doesn’t tase so good anymore…
And…
Just like how you can’t use a bunch of delicious icing to fix a nasty cake. You can’t use money to fix a miserable life.
Money is the icing to your life.
You need to be fit in all 4-parts of the Quadrafit Triangle. this way you have a great cake with delicious icing on top.
And when it comes to becoming financially fit, there are three ‘keys’ you have to understand:
1. Living below your means (strategically)
2. Increasing your income (the smart way)
3. Using your money (investing to create passive income)
Tomorrow I’m going to email you with strategic ways to save your money.
Yes, there is a right way and an expensive way to save your money. And tomorrow, I’ll be going over the most efficient ways to save.
Wednesday I’ll be talking about how you can increase your income.
And Thursday I’m going to talk about investing to generate passive income.
It’s going to be a fun week – so be sure to look out for my email tomorrow.
P.S. I’m opening up a beta-test group for our 5-week money management course 1-week from today! The test group will be open for a limited time & then I will close the course down. Those of you that get in early will get a 40% discount. Stay tuned for more details

Keep Hustlin,

Jaspreet Singh

<jsingh@theminoritymindset.com>

Twitter @M2JaspreetSingh

Legal Disclaimer:
Please note that when I send these newsletters, I’m sharing my experience and opinions. I’m sharing the resources, tools and information that I think can make an impact in your life.
However, I can never be responsible for your success or guarantee anything. The problem is that most won’t take action, hence, most don’t get any results. That’s why results are not guaranteed. And everyone is different so I cannot guarantee that everyone will like or benefit from things that I find beneficial.
I care about your success and that is why I believe in being real and absolutely transparent with you

Chinese authorities will soon allow so-called VIEs to list

Software engineer Zhang Yiming started out producing apps for sharing jokes before focusing on news aggregation. That pivot proved lucrative.

The 35-year-old founder of Bytedance Ltd. is worth about $13 billion, according to the Bloomberg Billionaires Index, making him China’s 9th-richest person and one of the fastest in modern times to amass a mega-fortune. The business, founded in 2012, has more than 1 billion active monthly users across eight mobile apps, including a news aggregator powered by artificial intelligence and a video-sharing platform.

His rapid wealth accumulation is a sign that China hasn’t lost its knack for creating mega-rich company founders despite a slowing economy. It also helps explain why authorities seem to be taking a more tolerant stance toward a corporate structure favored by the country’s technology tycoons, most of whom have chosen to list their businesses overseas.

Zhang’s fortune is harder to calculate than the founders of Baidu Inc. and Tencent Holdings Ltd. in part because his company isn’t yet public. It’s also difficult because Bytedance is structured in the same way as the two tech behemoths — a complicated ownership system known as a variable interest entity.

Of the 44 Chinese tycoons on Bloomberg’s wealth index, eight are tech moguls with VIEs listed outside China. The billionaires’ combined net worth exceeded $150 billion as of March 21, and their stakes weren’t publicly known until the companies filed with regulators ahead of going public in New York or Hong Kong.

VIEs have never been formally endorsed by the Chinese government. But in an acknowledgment of their importance, officials will soon permit VIEs to go public in the country, allowing them to list on a new technology-focused exchange set to launch in coming months.

Complex Structure

Bytedance is, for now, a closely held VIE with a complex structure that involves layers of holding companies.

Its main business, Jinri Toutiao, is ultimately owned by Zhang and Bytedance Senior Vice President Zhang Lidong through a Beijing-registered holding firm, according to China’s National Enterprise Credit Information Publicity System. Zhang pledged his 98.8 percent stake to another Beijing company, which in turn is owned by a Hong Kong-registered firm. That entity, where Zhang is a director, is owned by a company registered in the Cayman Islands. The principals won’t be disclosed unless there’s an IPO prospectus.

The Bloomberg Billionaires Index calculated Zhang’s net worth by pegging his stake at 65 percent and using the company’s valuation of $20 billion, a figure provided in 2017 by people with knowledge of the matter. The analysis assumes his stake has been diluted through funding rounds.

Bytedance is said to have secured a $75 billion valuation in late 2018, making it the world’s most valuable startup — though the figure isn’t used in the net worth calculation because the details haven’t been confirmed.

Yin Ai, a Bytedance spokeswoman, declined to comment on Zhang’s wealth or the ownership structure.

Zhang uses a VIE because Chinese regulations limit foreign investment across more than 30 sectors including the internet, telecommunications and education. The VIE structure — which allows offshore companies to control domestic Chinese businesses through contractual agreements — circumvents the rules and allows, for example, Baidu’s holding company to be based offshore (and list in the U.S.) while still being a dominant force in China.

Internet giant Sina Corp. pioneered the VIE model so that it could transfer income from onshore operating businesses to an offshore holding company, an arrangement that meant the Cayman Islands entity could list on the Nasdaq Stock Market in 2000.

There are risks to the structure for foreign investors, said Donald Clarke, a specialist in Chinese law at George Washington University.

“A contract entered into for an unlawful purpose is invalid under Chinese law,” he said. “Any time the government wants to pull the plug, it can.”

Still, that hasn’t stopped more than 100 companies using VIEs in offshore IPOs, according to research by Zhou Fang, a Beijing-based partner at law firm JunHe LLP, who predicts that more companies will follow.

That growth helps explain why authorities are slowly embracing VIEs. Earlier this month, China enacted a foreign-investment law that allayed investor concerns about the future of such companies, while unicorn VIEs will be able to list on the new exchange in Shanghai, known as the Tech Board.

“To some extent, it shows the government easing concerns over VIEs — but they still care about who’s the ultimate controller of the company,” said Zhang Biwang, a partner at Allbright Law Offices. As long as the controller of the company remains a Chinese citizen, “the government won’t shut their eyes and ignore reality to make the companies give up VIEs.”

— With assistance by Blake Schmidt