When running a business, you need to plan and grow your business to take advantage of new prospects. Expanding your firm requires purchasing or renting a new facility to house your new staff and equipment. There are times when you cannot raise such a large amount of cash by yourself and will have to seek a loan from a bank.

Most banks offer commercial property loans to help small and medium-sized enterprises expand and grow. Using the online commercial property loan calculator, you can find out the amount you can borrow, providing the loan amount, property purchase price, and tenure. Commercial property loans are available with either a fixed or adjustable interest rate.

A fixed interest scheme requires you to pay a predetermined interest rate for a period. Following that period, the interest rate will begin to fluctuate dependent on the bank’s interest rates. A variable interest rate system requires the consumer to pay interest that varies according to market rates. You can also select a SORA-pegged scheme with interest rates set by the Monetary Authority of Singapore (MAS).

Some aspects to consider while applying for a business property loan are:

Eligibility requirements

To qualify for a commercial property loan for an SME, you must have been in business in Singapore for at least a year. Over and above, your company’s revenue must not outnumber 20 million SGD and a minimum of 30 percent of the ownership should be shared by Singapore citizens or permanent residents.

Obtaining a business property loan is simple and involves little documentation. First, you must register your business with ACRA or MyInfo Business. This allows your bank to control those facts via the portal and collect the data necessary to approve your loan. In some circumstances, the bank may request additional information such as:

• The worth of the property
• The length of the lease or rent, if you are leasing the property
• The last two years’ financial accounts and
• The latest three months’ bank statements

Loan Percentage

Banks, in most situations, will not lend the whole price of the asset. Then, you must invest a percentage of the loan’s worth out of your pocket, which may be challenging for you to do on your own. As a result, you must endeavour to obtain the highest amount of the loan from the bank to pay the cost of the house. Most Singapore banks will lend you up to 80 percent of the estate’s worth.

Processing charges and other associated costs

When the loan is approved, a specific fee is deducted from the approved loan amount. It includes paperwork fees, service fees, and even valuation fees and other expenses. Though it is a small fraction of the entire value, it can affect your finances considerably, especially if you are in a bad financial situation and did not budget for such charges.

Knowing this, certain banks, such as DBS, have devised specific subsidies to cut service and legal fees, allowing SMEs to enjoy maximum benefits. Nevertheless, make sure you are aware of the property’s lock-in duration before you apply for a loan. Most banks have a lock-in term for the property, wherein you cannot mortgage or dispose of the property for a certain period. In the event of any breach of the rule, you have to pay a penalty set by the bank.

Loan Duration

Most Singapore banks help consumers repay their loans over a period that is convenient for them. The time can range from one to twenty-five years. In this instance, the interest rate will vary depending on the loan amount and repayment time.

Before you decide on the tenure, calculate the monthly repayment amount based on your affordability and economic condition. You can utilize the commercial property loan calculator to determine the amount of money you will need to pay each month and adjust your tenure accordingly.

How to use a commercial property loan calculator?

All you need is to enter the purchase price of the property and loan tenure to get the loan amount, which may be 80 or 90 percent of the property price, depending on your business circumstances. It will also provide the estimated monthly instalments, which may vary based on the loan package.

You can apply for a commercial property loan immediately if you want to grow your business and are considering a suitable property in mind. With these considerations in mind, you may plan, organize and request a commercial property loan in Singapore.