Crowdsourcing: Lendingpot’s Technique to Find the Best Business Loan for SMEs
Forget Crowdfunding, Lendingpot.sg Crowdsource for Business Loan Solutions Instead!
Crowdfunding refers to the practice of raising small amounts of money each from various investors, usually offered by an online platform.
In Singapore, the practice of crowdfunding has been increasingly popular as an alternative source of business loan financing. These are offered by various platforms such as Invoice Interchange & Funding Societies in Singapore. (See our list of business crowdfunding platforms in Singapore that we are cool with).
“SMEs find it hard to get business loans!”
At Lendingpot, we believe that every deserving SME is entitled to obtaining business loans in Singapore.
Although crowdfunding is another important source of funds, it does not fundamentally solve the problem that SMEs find it hard to get business loans! That is because it has nothing to do with how many SME business loan products are out there.
This problem can be summed up elegantly into a “vicious cycle”.
1 – High Barriers to Entry:
SMEs simply don’t know what they can get!
Have you seen the confusing way that banks like to name their products? A straightforward business loan is called BizMoney by UOB, Business Term Loan by OCBC and Business Installment Loan by SCB. Also, as a first time customer, who knows if they are supposed to be in ‘Business Banking’ or ‘Commercial Banking’ or ‘Corporate Banking’?
Multiply that confusion by all the various types of business loans meant for different purposes such as business overdraft, purchase financing, invoice financing, factoring, project financing, merchant cash advance, trade facilities.
Business owners are often too busy to try to know.
2 – High Touch
Since the business owner is confused, we would expect him to make multiple enquiries with a single bank. The conversations and application often take weeks. Then, the inevitable bank rejection occurs. He is then forced to start this entire process with another bank.
If he is lucky, at this point, he will be offered a business loan and due to the fear of any increased hassle, he will take up the loan regardless of its terms. He will neither know if this is the best loan for his business purposes nor whether the rates given were the best.
3 – High Cost of Consultancy
For the unlucky business owner, to avoid going through this hassle again, he will hire a “consultant”. In our industry, they are called business loan brokers who charge at least 3-8% per successful loan. This will be on top of the loan’s interest rate (10-13%) & fee (2%).
This is extremely expensive and will contribute to “High Barriers to Entry” again as most SMEs might find it hard to achieve such high-profit margin (>23%) to pay off the loan and be profitable at the same time.
“What is Crowdsourcing of Business Loan Solutions?”
“Reaching out to various financial institutions for proposals of business loans solutions that will meet your business requirements.”
There is a better way.
Advantages for the business owner if they crowdsource for business loan solutions
With only 1 business loan request to Lendingpot.sg, the owner will:
1 – know what type of loans his business is actually eligible for
2 – know at what rate these financial institutions can offer these loans at
3 – benefit from possible reduced rates or increased customer service since these relationship managers know that they are competing against each other
“Since Lendingpot works to benefit SMEs, why not try business loan applications with us?”
About The Author
Eric Koh is passionate about helping SMEs grow and has spent years interacting with business owners at OCBC and IFS Capital. He is interested in 70s Rock n Roll, the odd novel and copious amounts of historical trivia.
Connect with him via firstname.lastname@example.org