Getting A Term Loan For Your Business With A Neo-Bank
There are countless different types of loans in the market that cater for the many different needs of a business. A business term loan for small businesses is one of them. If you’re unclear, don’t hesitate to ask the bank if it is the best business loan you can get for the purpose you're seeking it for.
If you’re not sure, do some research and evaluate it for yourself.
What Is A Conventional Business Term Loan
The primary purpose of a business term loan is to offer financing that eases up business expenses related to paying staff wages, stocking, paying the cost of warehousing, hiring of freelancers, utilities, rent, and other overheads.
Before applying for a business term in loan in Malaysia, there should be a business plan and strategy in place to indicate your understanding of the current market. It helps the financial institution evaluate the competitiveness and viability of your business.
Based on the type of business financing you’re applying for, you may or may not need to provide a collateral. Some secured loans often require the business to provide some form of security in the form of business assets.
Do your own in-depth research in terms of whether the business term loan you’re applying for is giving you the most competitive fixed or variable interest rate and repayment terms. It should be something your company can handle for the repayment period.
How Much is a Typical Business Term Loan Amount in Malaysia?
The process of risk assessment for SME loans is time-consuming and complex. Identifying SMEs with reliable credit history and good repayment behaviours is complicated.
It has led to a gap where small businesses' inability to secure loans whenever they need it most. The relationships between traditional banks and SMEs have been strained for some time now.
Due to this, it created gaps in the financial industry which is now rapidly filled by neobanks backed by fintech companies who can provide SMEs with small business loans with flexible repayment schedules and affordable interest rates. It is the kind of alternative financing and startup funding that SMEs can count on to provide better control and structure to their cash flow.
Neobanks Are Not New
The consumer banking industry was somewhat jolted and then revolutionised during the pandemic. Even before that, with the emergence of these challenger banking platforms with no physical branches, neobanks have been on the rise in other parts of the world.
It's been around in developed nations like Europe and the United States since approximately 2013.
Neobanks' approach is customer-centric, focused on flagship products with great Unique Selling Propositions (USPs), and thrives on strategic partnerships.
As popular of neobanks continue to evolve in Europe and the United States, other regions like India, China, Southeast Asia, and Brazil is quickly taking shape. It's been growing over the years, although consumers are generally unsure about what neobanks are at the point of writing.
In the nutshell, neobanking is simply a new way of managing a company's finances, breaking free from the brick and mortar model.
It's, therefore, not a surprise that there's been a quick pickup over the past five years for neobanks.
The predictions are that the industry will continue to grow by some 30% for the next five years. The forecast is not without evidence. With digital transformation taking place in companies all over the world, after the pandemic, it is a natural transition.
The market is expected to continue growing by at least 25-30% in the next five years.
Getting a Small Business Loan from a Neobank
Applying for, getting approval, and securing the funding you need for your small business growth with a neobank is faster and easier.
Traditional banks may feel that small businesses lack solid credit ratings required for loan approvals; this is coupled with the fact that some small businesses may have sought business loans from informal sources in the past or at the time of application.
Although getting a business loan from a neobank is faster, more flexible, and has fewer red tapes, there are procedures neobanks look at before loan approvals.
What’s really important to neobanks is helping the community that it serves. For example, B2B businesses have been facing some of the biggest challenges even before the pandemic hit. It definitely needs to evolve as fast as its B2C counterpart can. Neobanks have stepped up efforts to help bridge the gap between businesses with intuitive platforms.
Easier, Faster Loan Approvals
The type of documents and history neobanks look at are basic business information for verification purposes.
The verification process is also much faster compared to conventional banks. Requiring no collateral and only a few years or months of active monthly transactions, fintech companies have noted the upward trend.
A major roadblock for small businesses seeking out funding and financial help from traditional banks is that they may lack collaterals, do not have proper accounting systems or documentation.
Are neobanks able to replace conventional banks? It is highly unlikely, at this point.
However, many industry experts believe that banks and neobanks have complementary products and services that can essentially provide a fully complete financial services package for big and small companies alike.
Before You Go…
INFT is now offering small business term loans in Malaysia. Our MSME business term loans can be used to help improve your company’s cash flow, fund either a purchase of assets or equipment, or cover ongoing overhead costs.
Business term loans in Malaysia are popular because they are simply more flexible and charge lower interest rates. So, if you’re looking for a SME loan for your business, let’s get started now!
Reach out to us at firstname.lastname@example.org or call us at +6018-7928328 for more information. We will be happy to be of assistance.