Every business that starts operations in Singapore requires ample funding. The resources can be directed to developing offshore company’s new products, marketing, opening new branches, or buying competitors. However, many start-ups often get themselves at crossroads when it comes to raising additional cash for their operations.
After venturing into the Singapore market, here are some of the four most recommended methods of raising funds.
Direct bank loans
One of the main methods of raising cash is borrowing from banks. Because the offshore company already has a bank account in a Singapore bank, the institution could lend you some finances.
However, most banks will want you to demonstrate the nature of the business operations, profitability, or even ask for collateral.
Remember that the banks attach some interest on their loans. If your business has been in operation for some time, it might even qualify for an overdraft.
Invoice financing is a special method of raising finances by selling the involve awaiting clearance. You can raise funds from the invoice through factoring. This involves selling the invoice to a factoring agent who pays 80% immediately while the remaining 20% is cleared after the client makes payment.
The Singapore limited liability company can also use an asset based loan to finance the invoice. In this case, the funds are provided and the payment made as clients clear the invoices. However, you need to have developed a good relationship with clients for the invoice to be reliable.
Raise funds using the capital markets
The capital market is a great tool when considering raising additional cash for growth in Singapore. To raise cash through the Hong Kong capital markets, you can consider a public issue or rights issue.
A public issue is a method of borrowing from public through debentures and shares. The offshore company in Singapore is required to seek the assistance of a merchant financial institution that can assess and value the shares correctly.
Unlike the public issue, a rights issue involves selling shares to current shareholders. Besides, could also prefer common stock or preferred stock.