Business Loans

Crowdsourcing: Lendingpot’s Technique for Finding the Best Business Loan for SMEs

Eric Koh
December 7, 2018

Forget crowdfunding, crowdsources for business loan solutions instead!

Crowdfunding refers to the practice of raising small amounts of money 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 a business loan 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, how would first-time customers know 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, and trade facilities.

Business owners are often too busy to try in order 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 repeat the entire process with another bank.

If the business owner is lucky, at this point, he will be offered a business loan; and due to the fear of further 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, consultants 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.



So what does crowdsourcing of business loan solutions mean?

“Reaching out to various financial institutions for proposals of business loan 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 one business loan request made through, the business owner will:

1 – know what type of loan his business is actually eligible for;

2 – know the rate that these financial institutions can offer these loans at; and

3 – benefit from possible reduced rates or better customer service since these relationship managers know that they are competing against one other.

Request for a Business Loan Now! operates a Business Loan Marketplace that allows an SME to connect to multiple lenders with just one application, allowing the SME to know who its prospective lenders are and the rates that they offer, in a very short time.

Leading digital loan marketplace Lendingpot connects SMEs to its network of 45 lenders comprising relationship managers from banks, financial institutions, and private and peer-to-peer lenders in Singapore. It aims to help SMEs overcome the information asymmetry problem and lack of transparency prevalent in the SME financing sector by offering SMEs financing options such as business term loans, property loans, revenue-based financing, credit lines, working capital loans, bridging loans, invoice financing, and more.

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.

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