Small business loans in Malaysia are provided for businesses and entrepreneurs usually to help you start your operations. Whether you are selling newspapers or magazines or intend to start a fruit juice business, there are actually such loans to help you get started.
Why get business loans?
The main idea behind getting such a loan is so that you can start your business with the least headache and stress. With a business loan, you get the funds and money to roll so that you can free up some cash flow.
Types of loans you can get
The most important thing you need to consider when it comes to this type of loan is why you need it. You have to start with an aim while knowing how much you can afford. In most cases, such loans can be obtained for a short to middle term which is from 3 to 5 years.
Terms you need to know about business loans
If you intend to apply for a loan to start your business, there are certain terms that need to be considered. Here are some crucial ones:
- Interest rate – This is usually a fixed rate offered by the bank or financial institution. In most cases, it should not be more than 10%
- Term – Or known as tenure, it is the time taken for you to fully pay off the loan. Term here is usually expressed in years or months.
- Loan – simply put, it refers to the fact that you are borrowing money from the bank. The term loan means you are going to take a principal amount with interest rate being applied
- Grant – Some agencies offer this. A grant refers to the situation where the agency helps you get the money without needing you to pay back. The amount however might not be very high
- Investor – Refers to a person or organization that injects funds into your business. investors usually want something in return like a share in the company
- Collateral – A form of guarantee (either a property of something of value that the bank acknowledges) in case you fail to service the loan
In a small business you know that there’s going to come a time when you need to rely on other people’s money to ensure that your business gets expanded so that you reach your financial goals. The key to consider here is when the best time is to get a business loan. This is something that, given the economy, needs to be researched thoroughly.
One thing to consider is that although many small-business owners pride themselves on being able to pay for most of their business expenses out of their profits or out of their own savings, eventually this will not be a sound financial strategy, especially if they want to expand the business past a one person shop.
In a case like this, especially if they’re thinking of moving to a larger office, or hiring employees, and business loan is something they will have to look into.
Always calculate your loading
Of course the question of whether or not there really is a “best time” to get a business loan is something that plagues many small-business owners. On the one hand they want to see their creation grow and be profitable over the long term and as quickly as possible. On the other hand, they know that if the business is in trouble, they may not be able to pay back the various loans that they have taken out.
Of course, if you as a business owner looking at a very large loan then, the best time to apply may be when you are so busy with work and clients that you can barely breathe.
This means that you can show the lender not only your sound business strategy but also that you are busy enough to warrant a loan for expansion. Lenders always want to see that a business has enough customers and work consistently before granting alone. And once you hit this level, it is the perfect time to apply for a business loan.