Unforeseeable events and financial emergencies could happen to anyone at any time, whether or not you already have an existing loan. However, having an existing loan does not mean that you are unable to apply for more funds for your current situation. Some of the emergencies that could necessitate asking for a second loan include medical bills, education funds, and a wedding.

Similar to the first loan, the borrower is required to meet specific requirements to qualify for the second loan. If you are already making payments to the first loan, the licensed moneylender will evaluate your repayment capacity before approving your application for the second loan.

As such, if the licensed moneylender believes that you are unable to pay back two loans comfortably, they will not approve of your request for a second loan. And in that case, you may need to look for other options to borrow additional funds while on a loan.

1. Seek a second licensed moneylender

While it might seem like an excellent choice to seek a second licensed moneylender, this option is not as easy as it seems. This is because you will have to go through the necessary loan eligibility requirements once more.

Licensed moneylenders will look at your income and your repayment capacity before deciding if you are eligible for a second loan. If you do not qualify for a loan from one licensed moneylender for one reason or another, there is a high chance that the second licensed moneylender you seek will reject your loan request as well.

2. Apply for a loan on top of a loan

Licensed moneylenders understand that borrowers might require more than one loan to deal with various financial emergencies that come their way. As a result, licensed moneylenders in Singapore have an option to top-up loans for their customers. A top-up loan will increase your existing loan limit, which eliminates the need for you to seek another licensed moneylender.

Some licensed moneylenders also allow you to combine your new loan with the old loan and treat it as a consolidated loan. How much money you can get on top of another loan depends solely on your eligibility. The lender will look at your credit score, current liabilities, and income before approving your loan request.

3. Take more than one similar loan

If you meet the eligibility set out by the licensed moneylender, taking more than one similar quick loan in Singapore is another option. However, the requirements for taking a similar loan in most financial institutions in Singapore are stringent. If you are most likely going to apply for a top-up loan, the best option is to speak to a licensed moneylender that can quickly fulfil your increased need for additional funds.

Taking a top-up loan from the same licensed moneylender can be simple due to the documents that were previously submitted and the trust that was built. The licensed moneylender knows your ability and reliability as you are already servicing an existing loan with them.

Conclusion

Borrowing additional funds is an excellent way to finance all types of projects or even deal with personal emergencies. However, you should ensure that your finances are not significantly affected by taking a second loan.

With licensed moneylenders in Singapore, many individuals can obtain the right loan for their financial circumstances without any worry. However, not all loans are right for your financial situation. Whether a loan is good or bad for you depends on several factors. Some of these include the capacity to repay, the type of loan, and asking if the loan is a luxury or a necessity.

Here’s what you need to know about the differences between obtaining good debt and bad debt.

Good debt

A good debt seeks to create assets over time. The three types of loans that are generally considered to be good debts include education loan, home loan and business loan.

Home loan

A home loan is often considered a good debt to take in Singapore. Unless under extraordinary circumstances, the value of a home is set to increase over time. This makes it a good loan option and a good debt.

Once you can afford a house for yourself, you will not have to pay rent to other homeowners. The money that would have been used to pay rent can be kept as savings, or used to buy furniture in your new home.

Education loan

Education is considered good debt as once a person fully completes their education, they will be able to apply for jobs and have their own income.

Should you, for instance, take out an instant cash loan to pay off your academic debts, you will be able to seek employment after completing your education and begin to pay off any remaining academic debts or loans.

Business loan

Typically, a business loan is meant to expand an already existing business or to help entrepreneurs start a new business. Any company that seeks growth can obtain a business loan to help them through the early stages of their business until they begin to make profits and pay off any current and remaining debt.

Thus, this makes a business loan a good debt to have.

Bad debt

Bad debt isn’t disadvantageous. Rather, bad debt is proposed for luxury uses that are not necessary for the individual. Examples of bad debts include borrowing a loan for a foreign trip, using a credit card to purchase items, or obtaining an auto loan.

Credit cards

The reason a credit card is considered a bad debt is because the interest charged on them is extremely high. Even though the purpose of a credit card is useful, it can be detrimental to your overall credit health.

Instead of obtaining a credit card, you can make use of financial management by saving up before purchasing. This way, you will be able to purchase the item without hurting your credit health.

Personal loan

Interest rates on personal loans are high. Thus, you should only take a personal loan when it is necessary. For instance, taking a quick cash loan for an international trip is considered bad debt.

Auto loans

Buying a motor vehicle can add value as an asset. However, taking a loan to buy a car for personal use is often considered as a bad debt. This is because all a car will do is consume your money, through gas prices and Certificate of Entitlement costs in Singapore.

Despite this, buying a car for business use such as commuting to work can also be categorised as good debt as you can save on costs. As such, the reason an auto loan can be both a good or bad debt depends entirely on the reason why you decide to purchase a car.

Conclusion

There is an argument to be made that all debts are bad. However, many people have been able to change their lives through loans. You should always know when is the right opportunity to take a loan, and the reason to take it.

There are countless challenges related to borrowing. However, with the right guidance and support, you can overcome them and ensure that your business will flourish.

Here are the 3 key problems commonly associated with borrowing in a business setting, and how you can avoid them.

1. Financial management

Small business owners who do not know how to tackle the pressure of operating a business effectively and are seeking to pay back outstanding debts will find it hard to manage their finances. Small businesses have to deal with invoices, reporting, tax issues and tax repayment, all of which can be difficult to manage on their own.

The situation is made worse when businesses borrow even more funds to manage their finances. The complexity of having too many outstanding loans and extra funds can be confusing for many business owners. Even though the business owner may be capable of handling business accounting, it can be overwhelming. Thus, it is essential to seek professional help.

If you ever find yourself with multiple loans and debt repayments, borrowing a consolidation loan can be pivotal. This way, you can remove all the confusion of existing loans and focus only on one repayment to a single licensed moneylender.

2. Access to funding

One of the biggest challenges for most business owners, especially startups, is having access to funding. While there are many fast cash loan licensed moneylenders in Singapore, finding the most appropriate one for your business is not easy.

Licensed moneylenders rely on business financial records which many small enterprises may not have. In such cases, asset-based loans are an excellent alternative to funding your business as they can be relatively easy to obtain.

At the same time, as you’re choosing a suitable financing option for your business, look out for reasonable repayment schedules and interest rates as well.

3. Maintaining positive cash flow

For every business to run successfully and smoothly, cash flow is an essential factor to consider. During the early stages of your business, profits can be challenging to come by. This is also the stage where you may have little or no trust from licensed moneylenders as you are not fully established yet.

There are a few solutions you can use to mitigate these cash flow problems. You can create early cash flow forecasts, helping you to know how much your business will need in the upcoming months. Cash flow forecast is a simple accounting tool that can ensure you stay updated on your financial figures. Another way of ensuring positive cash flow is to notify your clients or your customers to make early payments. You can also think of other innovative ways to make your customers pay early, such as incentives, deals, or even discounts.

Conclusion

When you are running a business, you should prepare for any recurring expenses, some of which can be unpredictable. These include damaged equipment, a broken system, and a stolen inventory, all of which are variable. These are some of the things that you cannot predict for your business.

Thus, borrowing is inevitable when you are running a business. When you are hit by an emergency, stopping business operations can be detrimental to cash flow and profits. You can sort out your issues by taking out a fast cash loan for your financial worries while remaining financially responsible with your funds.

When you enter into a contract in terms of a mortgage, overdraft, credit card or a fast cash loan, you have entered into a consumer credit contract. In simple terms, consumer credit is an agreement with specified terms made between a consumer and a licensed moneylender.

What you need to know

You should take the time to understand and familiarise yourself with what you are getting into before signing any consumer credit contract. Here are the key details you should know:

• Total repayment amount
• The interest rate and any other fee attached to it
• The repayments you will make
• What to do in case you are faced with a difficulty
• The process of cancelling a loan

The licensed moneylender must put all this information on the table before you sign up for anything. This process is called disclosure, where you will read and understand everything about the contract. If you do not understand anything, you should ask the licensed moneylender for clarification. At the same time, you can also seek independent advice from a third party – be it for application of an instant cash loan or consolidation loan.

What the licensed moneylender must disclose

After signing up for a loan, your licensed moneylender must provide information about the life of the loan throughout the repayment period. If the licensed moneylender uses a standard form contract for all customers, they should publish it clearly on their website.

For as long as the licensed moneylender operates a public business, all information must be published on a notice board or given to customers free of charge. As a customer, you should take home a form displaying this information or read up on it on their website so that you can compare it with other loans.

Look out for default fees

Ensure that any default fees charged by the licensed moneylender are reasonable. Below are some of the costs you should expect and what they are. You should remember that the fees mentioned below are not operating on a flat rate, but rather depends on the type of loan that you are applying.

Establishment fees

The establishment fees should be equal to or less than loan processing. Establishing fees involve setting up the loan, processing and advancing the loan.

Prepayment Fees

In a case where the borrower makes an early payment of their fees, the licensed moneylender will be forced to charge a reasonable fee to cover losses resulting from early loan repayment. This is called prepayment fees. Such fees can include administration costs or any damages as a result of the re-lend interest rate.

Interest rates

Licensed moneylenders will charge a certain percentage of the total loan payment over a given period. Before signing up for any loan, ensure that you are comfortable with their interest rates.

Default fees

If by any chance, the borrower breaches the contract, the licensed moneylender will be forced to enforce the credit contract. However, the default fee cannot be more than the amount that compensates the licensed moneylender from the cost incurred as a result of the borrower’s breach.

Conclusion

If you have previously borrowed funds, you may know or have encountered some of these charges above. While there are other essential factors to consider, the above points are the key things you should know about consumer credit contracts.

The most important thing is to spend as much time as possible with the licensed moneylender by asking questions about the contract that you are about to sign into.

Most licensed moneylenders rely on business credit scores to determine whether or not they should give out loans to startups and established business owners. This is because business credit scores can let creditors, suppliers and licensed moneylenders assess whether your business is creditworthy before issuing out a loan.

When you start a business, having a good business credit score is essential. If you have a high business credit score, you will have a higher chance of qualifying for a loan – be it a consolidation loan or instant cash loan.

Here are 5 ways you can increase your business credit score, and in turn improve your eligibility for a loan.

1. Pay your invoices on time

Late payment of invoices can affect your business credit score negatively. Thus, the best way to improve your business credit score is to pay back your invoices to creditors and licensed moneylenders on time. In your business credit report, it will reflect that you do not have any outstanding payments, ensuring that your business credit score will increase. By increasing your business credit score, you will also directly improve your eligibility for a loan.

2. Pick a supplier that makes a report of all payments to credit agencies

Another thing that you should consider is the choice of supplier. Small business owners often suffer from incomplete business reports as their suppliers do not report payments as required to credit reporting agencies. If you make all of your payments on time without delay, then you should seek a supplier that reports to credit agencies and improve your business credit score.

3. Avoid depending on credit

When you start a business, a quick cash loan is often your only hope of financing your venture. However, it is essential to note that timely repayments for such loans are important in improving your credit score.

Relying too much on credit can also be detrimental to your fiscal health. You should strike an optimal balance between taking out a loan and meeting your current financial obligations, such as existing debt and payments.

You should seek to avoid situations where you will use up all of the credit that is loaned to you. Credit is vital in ensuring that your business is stable, so you should ensure that you do not use up all of the credit loaned to you.

4. Separate business history from personal history

In every aspect of your operation, you should separate personal credit from business credit. Doing so will minimize the financial impact each will have on the other. For instance, if you are going through financial challenges on a personal level, it should not interfere with your business credit report. If your business has problems, you should not let it affect your financial stability.

5. Register your new business with a business credit agency

Through a business credit agency, your business credit report can be maintained and built up, which can help you qualify for loans, score lower interest rates, as well as receive better terms for your loans. Once you have registered with a business credit agency, you can start building your business credit.

It is also vital to ensure that your business profile is in no way linked with your personal credit profile.

Conclusion

As a startup business owner, the thought of building a business credit score from scratch can be scary. This is because you may not know how to do so, or how to go about doing it. However, with a little research and the tips above, you will be able to improve your business credit score and in turn, improve your loan eligibility in the future.