Business Loans

Reasons why businesses should start at a Digital Loan Marketplace over a direct lender (Banks or FIs)

Lina Tay
December 21, 2022

Top Reasons why every business should start at a Digital Loan Marketplace over Banks or FIs

In the past, if a company or startup needed an SME business loan, they would go to their bank or local Financing Institution (FI). The process was often slow and required a lot of documentation. In recent years, however, a new model of lending has emerged—the digital loan marketplace. 


What is A Digital Loan Marketplace?

A digital loan marketplace is a platform where borrowers and lenders can connect with each other to match the best SME loans. This type of marketplace typically offers a more efficient way to obtain a maximum loan and a wider range of options for both borrowers and lenders when it comes to unsecured business loan applications.

For borrowers, a digital loan marketplace like Lendingpot can offer access to a larger pool of potential lenders, with over 45 lenders currently on board. This can increase the chances of finding a lender who is willing to provide the desired business term loan amount at favourable terms. In addition, borrowers can use the marketplace to compare multiple offers from different lenders before deciding.

For lenders, a digital loan marketplace provides an efficient way to find and connect with potential borrowers. Lenders can use the marketplace to evaluate borrower profiles and determine which loans are likely to be repaid on time. In addition, lenders can use the marketplace to compete for business by offering loans to business in Singapore at competitive rates.

The Challenges of Applying for Business Loans Through Traditional Banks 

Borrowing money from traditional banks used to be the only option for businesses. Although traditional banks may seem to be the safer choice for business loans, it comes with many challenges. It can be a long-winding and tedious process without results, especially for smaller or new types of businesses with unverified ability to repay their loans.

In the current economy, small business loans are getting harder to approve with limited business loan options. This is because banks are wary of loans for small businesses, as they are considered to be a high risk unsecured loans. These SMEs often have difficulty repaying loan instalments, especially if they are struggling financially. 


Conservative Loan Structures

One way that banks try to mitigate this risk is by offering unfavourable loan structures that require additional collaterals like property or receivables. These are not small business friendly as most businesses do not own properties or have high quality receivables to collaterise. As such many SMEs end up getting rejected by loan providers. 

Banks Do Not Understand The Unique Needs of Small Businesses

Banks are in the business of making money, and they do this by lending money to people and businesses who need it. But sometimes, banks can be inflexible when it comes to meeting the needs of SMEs in Singapore. This can be frustrating for business owners who are trying to grow their companies.

There are a few reasons why banks might not understand the needs of businesses. First, banks are risk-averse institutions. They want to make sure that they will get their money back, with interest, before they lend money to a business. This can make it difficult for businesses to get loans, even if they have solid plans for how they will use the money.

Second, banks tend to focus on short-term profit rather than long-term growth. This shift in priorities has had a negative impact on business loans.

Businesses rely on loans to invest in long-term projects that will help them grow and succeed. But when banks are more concerned with making a quick buck than supporting businesses, it becomes harder for businesses to get the financing they need.

They May Not Be Willing To Work With You if You Have Bad Credit Or Are Self-Employed

If you have bad credit or are self-employed, you may find it difficult to obtain a business loan from a traditional bank or moneylender. Traditional banks and moneylenders often require collateral for loans. If you have bad credit, you may not have any assets that can be used as collateral. Other than that, a solid proof of income is required before they approve on the loan. If you are self-employed, it can be difficult to provide this proof. 

Banks and lenders often have strict eligibility requirements for loans. If you don't meet all the requirements, your loan application will likely be denied.

If your credit score is less than stellar, they may charge higher interest rates than alternative lenders, making your monthly re-payment a challenge.

How Can Digital Loan Marketplace Empower Singapore Businesses

A digital loan marketplace like Lendingpot can provide businesses with the business financing they need to grow and succeed. By connecting businesses with a network of lenders, a digital loan marketplace can give businesses access to capital that they may not be able to obtain on their own. Additionally, a digital loan marketplace can provide businesses with competitive rates and terms, making it easier for them to get a business loan they need.

The purpose of a marketplace is for customers to compare products and get the best deals. As a business owner searching for the best SME business loans, a digital marketplace empowers you to make informed choices. 

Read on to understand how utilizing a digital loan marketplace gives you the upper hand in making the best business loan decision for your business in Singapore. 

Transparency of Having All lenders in One Place

By bringing all lenders together in one place, a digital loan marketplace offers a unique benefit to borrowers - transparency.

With so many lenders competing for business, borrowers can be confident they're getting the best possible deal on their loan. Businesses that are looking for a loan have many options to choose from. Applying for a loan on an online business loan marketplace gives businesses the opportunity to compare lenders and find the best rates. 

Comparing rates and terms from multiple lenders is the best way to ensure you are getting the best deal on an unsecured business term loan. You get to see the breakdown of the business loan amount, business tenure, and interest rate options from various lenders such as UOB, DBS, Standard Chartered and many Financing Institutions as well.

Choosing the Right Type Of Loans for Your Business Needs

When it comes to SME loans in Singapore, there are many choices available. How do you know which loan is available and the right fit for your business? 

Start-up business loans can be used for a variety of purposes, such as working capital, equipment purchases, or growing your business. When it comes to finding the right business loan, there's no one-size-fits-all solution. That's where online business loan marketplaces come in handy, by offering a variety of lenders that specialize in different types of loans.

This can be a great way for businesses to find the right fit for their needs, whether they're looking for SME working capital loan with low interest rate, short term business loans with low interest rates or start up business loans in Singapore. You can also refer to our comprehensive guide to best business loan Singapore

Leverage On Special Promotions, Grants, and Schemes 

Occasionally, Enterprise Singapore may introduce and push out new initiatives from banks in Singapore or grants to aid small businesses in Singapore.

With Lendingpot, a digital loan marketplace, we provide customers with periodical offers & promotions for borrowers to maximise savings for you and your business. 

As a corporate loan applicant, you can leverage on these offers for perks and lock in the best company loan deals.

Speedy Loan Application and Approval Process

Before the onset of online loan marketplaces, to apply bank loan for business, companies would have to submit separate loan applications to different lenders and then wait for a response. This process could take a few business days or even weeks. But with the rise of digital loan marketplaces, borrowers can now get pre-qualified for multiple loans fast and in just one application. 

What's even better is that these digital platforms provide a dedicated team to support their loan application. Based on the experience of the team, they are able to better advise borrowers on their loan application and borrowers would be more informed on how much they're eligible for and can compare offers from different lenders side-by-side. This gives borrowers the power to choose the best loan option for their business purposes.

In the business world, time is money, and the speediness and convenience of a digital loan marketplace enables businesses to make swift yet informed decisions that will influence their growth and profit.

Protect Your Corporate Credit Rating

When you apply for a loan from a bank, the institution will conduct a hard inquiry into your credit history. This will result in a temporary decrease in your credit score.

A hard inquiry is when a lender requests your credit report from a credit bureau. This may negatively impact your credit score and may be something your company want to avoid if you're not ready to take out a loan.

When applying for loans on a digital marketplace, a hard inquiry is not done until you have made a formal application with a registered lender. This will allow you to shop around for the best interest rate and terms without having to worry about your credit rating being impacted. 

Tailored Business Loan Offers

Business loans on digital loan marketplaces are personalised to fit the specific borrowing needs of each business. Loan terms and conditions are customised to the borrower's business type, size, and credit history. This allows businesses to get the best possible loan for their needs without having to shop around for multiple loans.

Digital loan marketplaces also offer a variety of repayment options that can be tailored to the borrower's ability to repay the loan. This flexibility in business loan can help companies keep their monthly payments affordable and avoid defaulting on their loans.

Overall, business loans on digital loan marketplaces are more flexible and customisable than traditional bank loans. This makes them a great option for businesses that need financing but may not qualify for a traditional bank loan.

Seek Expert Advice From Financial Advisors

The digital loan marketplace is run by a team of financial experts operating in Singapore who knows the ins and out of the finance industry. When you apply for loans on a marketplace, you will be supported by a dedicated financial loan advisor who will guide you through the whole application process.

The experience of the support team can help you to understand the different options available to you on a digital loan marketplace, and they can help you find the best deal for your needs. They will take into account your Company registered in Singapore, revenue and expenditure, as well as your credit history, in order to find the best sme loans for small organizations that is the most suitable option for you.

What’s more, financial loan advisors can also help you to negotiate better terms with lenders. They have experience in this area and with good relationships with various relationship managers in the lending space, would be able to get the best deal for you and your business.

Evidently, the digital loan marketplace has empowered businesses with many types of business loans. Running a business is no easy feat, but with easier access to capital and funding via trusted marketplaces, businesses can better manage their cash flow quickly and easily. 

This results from approved business loan can also help to grow and expand the business for shareholders at a faster rate than projected. As the digital loan marketplace continues to evolve, Lendingpot will incorporate even more robust lending partners and provide even more opportunities for businesses to succeed.

Why Apply For A Business Loan with Lendingpot?

Lendingpot is a digital loan marketplace that wants to empower businesses by revolutionising the way businesses apply for financial products such that they get the best outcomes in approval and loan options. 

Take your business to greater heights when you apply for a business loan in Singapore with us. Application is free, and you only need to submit 2 documents to qualify for the SME loan with incoming offers as fast as 48 hours. We only allow screened and approved lenders for SMEs, sole proprietors and LLPs. Secure your first business loan today with us and let's grow your business together for a better 2023.

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

Lina heads up all things marketing and branding at Lendingpot. With a keen aesthetic eye, she believes in the use of design to communicate with our SME community and aspires to turn Lendingpot into a household name. Out of work, she is an avid camper and appreciator of nature’s best works.

business loan
SME Loan
money lenders
licensed moneylenders

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