Grow Your SME Business: Taking on Loans | OCBC Business Banking SG
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Why borrow when you don't have to?

Why borrow when you don't have to?

  • 20 October 2020
  • By OCBC Business Banking
  • 3 mins read
Taking on a business loan is something practically all SMEs do in order to grow. With extra liquidity, businesses have the funds to open a new outlet, expand inventory or even hire new talent. For businesses that borrow only when the need arises, it can be a frustrating experience if the funds are not approved or disbursed in time, especially if they are needed urgently.

Here are four reasons why businesses borrow, even when they don't have to.

Leverage your track record

It is easier for a business to apply for a loan when it has a strong track record and maintain solid financials. Banks are more likely to approve the loan, when they are convinced that the business has the capability to make regular and prompt repayments. Waiting until you really need the funds before applying for a loan may not seem like a good idea, especially if an unexpected event demands more cash. Using your strong track record to borrow first, can be a prudent business decision.

Keep ahead of the curve

The good times may not always roll. Some businesses are more sensitive to the ups and downs of the economic cycle. And during times of economic weakness, banks and lenders may not be so willing to lend due to the higher risks involved. And rates may not be as competitive when the outlook is uncertain. If you borrow before the down cycle strikes, the extra liquidity will ensure you can ride out the storm and emerge stronger than before.

Charge up for the future economy

Here today and gone tomorrow. Consumer trends, new technology and business models are all evolving at breakneck speed. Bubble tea was popular, dwindled in interest and made a comeback. The smartphone you bought today could be obsolete in a matter of days, not to mention the business equipment and software you use. And for businesses looking to gear up for changes in the marketplace, having sufficient funds means you will be able to respond these developments in a nimble yet effective manner.

Take advantage of seasonal demand

Festivities such as Chinese New Year and the year-end holidays are a time when consumers throng the streets in search of a good deal. This is when businesses such as F&B and retail outlets see an uptick in sales. But not everyone captures these opportunities, because resources are stretched too thin. Tapping on a loan before the peak will help you seize the chance to end the year on a high.

How you can plan differently with the OCBC Business Revolving Short Term Loan

As a business owner, why should you take on a loan when that could mean extra costs?

With OCBC's first of its kind Revolving Short Term Loan, flexibility and cost-effectiveness are two key features. Tailored to businesses in operation for at least two years, the loan offers funding of up to S$200,000.

Business owners don't need to pay any interest if they choose not to use the cash, but pay only a small fee for keeping the money as a buffer.

The added flexibility comes in the form of being able to draw out the amount, repay and redraw again when the need arises. If your business decides to pay off the entire amount, there's no early redemption fee too.

It's never a bad thing to plan for the future; whether it's for a rainy day, or for potential development, the OCBC Business Revolving Short Term Loan could be your answer.