The Rising Economy in Singapore
This is a preview of an assignment submited on our website by a student. If you need help with this question or any assignment help, click on the order button below and get started. We guarantee quality, 100% plagiarism free work or your money back.
The Rising Economy in Singapore requires young entrepreneurs and SMEs to seek for loan. Hence, below are Loan Management Tips
Singapore is among the fastest rising economies in Asia besides China, Japan, South Korea, thus, young aspiring entrepreneurs are obliged to seek financial assistance to catapult their businesses to the next level. Therefore, this forces them to start the process of brainstorming on ideas of starting up their own businesses or companies because the formal employment platform is highly competitive. In a bid to adapt to the stiff competition in the formal sector, many young Singaporeans are in search for capital and funds to jump start their enterprises. Loan applications in Singapore is very high, however, 90% of these applications are rejected by banks especially among SMEs.
For most young people in the country, raising capital is a major hurdle because many banks do not want to themselves in offering loans to small businesses because of the risk of collapse and the lack of a financial track record of commercial sustainability. The Monetary Authority in Singapore has extended the loan repayment period for all citizens in the country. Prior to this mandate, citizens were allowed to pay their loans within shorter periods of time but this new policy requires that one should pay all their loans before the age of 75 years.
However, due to the presence of international brands and companies in Singapore, young people need to know the tricks of handling loans for their start-ups. Therefore, below are the tips of managing any business loan.
During the start of the loan application process, the applicants should have drafted a consolidated budget plan of how best to manage and handle the finances once the loan is guaranteed and secured by the bank. Young people in Singapore are known for their love for entertainment; hence to avoid reckless spending of the loan money, the applicant should have a solid plan of how best to account for each and every coin spent. Therefore, it is advisable that small start-ups operating on loans should consult financial firms in order to get the best recommendations of how best to handle the cash. Furthermore, interacting with officials from licensed money lender organizations is another approach in receiving the best consultation of money management. Therefore, the best approach of budgeting the loan is to open or create different bank accounts that will handle the loan transactions for the business operation. For example, opening separate business bank accounts whereby the loan is equally distributed among the bank accounts so that the business owner is conflicted if they decide withdraw or transfer funds due to the additional costs incurred. Ensuring that all financial documents are updated is important because it indicates the monetary value of the business for future references. For instance, updating tax reports is important because it is the legal document that shows the legitimacy of any business in Singapore.
Setting up a versatile repayment plan is part of the budgeting scheme whereby the SME has a financial plan to handle all incoming and outgoing cash within the business. The most daunting task for small businesses and SMEs is loan repayment especially if the business is not generating enough income. In Singapore most start-ups have a tendency of defaulting their loan payment protocol forcing banks and other financial institutions to either foreclosure these enterprises or even auction their belongings in order to recover their money. Most banks in Singapore have flexible repayment plans such as variable installment schedule. Basically, this allows SMEs to make minor payments when business is slow and pay huge among amounts when the enterprise is at its peak. Eventually, it is a win-win strategy for both the bank and business because they both get to enjoy financial growth. Automatic payment of the loan is the best approach of paying off the debts because it guarantees accountability and discipline when handling all cash flowing in the business. This mode of repayment is effective and allows the business owner to track the loan repayment balance through the banks e-statements or digital receipts once the monthly loan amount is paid electronically.
This is most efficient way of managing any impending loan because it helps the business to operate at its best without the need for interfering with its operational or production cost. Basically, all personal expenses that are not business-oriented should not be paid off by the money generated by the business. This is the best way for the enterprise to track its productivity based on profit margins, sales returns and overhead costs at the end of any business day. Cutting unnecessary costs due to miscellaneous activities like entertaining clients which is customary tendency in Singapore should cease. From a cultural perspective Singapore business men are known to entertain their client especially after finalizing on contracts or business deals. However, it should be noted that such costs might affect the loan repayment scheme set in place. Furthermore, the Asian culture of operating on debts needs to stop in order for commercial businesses to enjoy profits and free themselves from financial bondage from banks. Thus, it is important for entrepreneurs in the country to dedicate themselves in paying off their loans within the agreed upon duration for the sake of maintaining a good rapport with the banks. Moreover, it builds the company’s financial reputation in case in the near future they want another loan.
The false feeling someone gets when they have successfully secured loan can be deceitful to the point of misusing loan money to buy personal items. This tendency is prevalent among the young people in Singapore which is a worrying trend. Therefore, young entrepreneurs need to understand the need to be full aware of the repercussions of defaulting to pay their monthly loan. First of all it attracts additional interest and penalty on the loan amount borrowed. It deepens the financial turmoil for the borrower possibly to the extent that they might have to close their SMEs or start-up enterprise. Hence, it is important for aspiring business professionals to maintain operational control of the funds to ensure that the business functions within the set monetary value. To ensure that the funds are properly utilized, it is advisable that the borrower hires a third party individual who will monitor how the money is spent. Alternatively, hiring an audit firm to constantly balance the accounting books and records is another approach in ensuring that the business owner does not spend more than what is being generated.
Singapore is considered as the gateway to Asia because of its touristic attractions and exquisite international airports that serves as the hub for all connecting flights throughout the continent. If all young people in the country can learn and implement the above loan management techniques they are bound to enjoy profit-making businesses free from debt.