At some point, being self-employed in Singapore may lead to a need for additional funds. You might find yourself wondering if you can borrow from a licensed money lender.
The answer is yes, and this decision-making process can be empowering, putting you in control of your financial future.
The answer is yes, you can. However, like most financial decisions, there are a couple of things you ought to have considered in advance.
Therefore, this post will explore everything you need about loans from a licensed moneylender as a self-employed borrower.
Analyze your financial profile of the Money Lender
As a self-employed individual, your income is most likely not as predictable as someone with a fixed monthly salary. Notably, this fact can make lenders cautious when lending you money. But that doesn’t mean you can’t qualify for a loan. With proper and regular financial analyses, you can qualify for a loan to boost your business or solve a personal financial need.
Before awarding you a loan, licensed money lenders in Singapore often evaluate your ability to repay the loan based on your income statements, bank records, and credit history. Therefore, if you’ve diligently kept your finances in order, you’re already one step ahead.
Documents Required
If you approach any money lender, you should have various documents proving that your income and financials are in place. As self-employed, you must present bank statements covering the last half year. Also, you should provide invoices and contracts if you have them.
The more evidence you can generate to substantiate that you have an income worth something, the higher the probability of getting their loan in your favor.
Interest Rates and Repayment Terms
Even as a self-employed person, you don’t want to find yourself in a position where loan repayment is unmanageable.
Therefore, always note that money lenders operate at higher interest rates than banks. This is because they take risks in offering their money to people with more significant risks, primarily the self-employed, whose flow of income might be unstable. Always find out about the interest rate and payback conditions.
Borrowing Responsibly
A loan is a commitment, and failing to pay on time means paying more in fees and may actually adversely affect your credit score.
Therefore, just because you can borrow money doesn’t always mean you should. Be realistic about your situation and ask whether debt is a good choice.
Responsible borrowing is usually advisable when financing essential expenses or developing a business. If costs are unnecessary and can be avoided or postponed, then borrowing may not be necessary.
How to Choose the Right Money Lender
Not all lenders are equal. While there are licensed money lenders, there are equally licensed unlicensed lenders who masquerade as legal lenders. Therefore, always use the services of licensed money lenders that are regulated by Singapore’s Ministry of Law only. These operate with tight stipulations.
Importantly, always avoid those not licensed because, as expected from an illegal loan, most work outside of legal jurisdiction to trap you in a never-ending vicious circle of debts.
Conclusion
Being self-employed is not a disadvantage, but an opportunity for financial freedom. With the right approach, a loan from a licensed money lender can be a valuable tool for addressing your financial needs. Responsible borrowing can lead to financial stability and growth, giving you the confidence to pursue your entrepreneurial goals.
Therefore, it’s crucial to prepare the necessary documents, thoroughly understand the terms, and avoid borrowing more than you genuinely need. This level of understanding and preparedness will ensure you’re making a responsible decision when borrowing from a licensed money lender, safeguarding your financial health.