A significant Singaporean bank declared just last month that it had reduced processing fees for
its business loan products by as much as 60%. Following a surge in small-to-medium businesses
seeking credit to manage expansion and recovery strategies, that action was taken. You may
already be looking into your options for a business loan. Your bottom line may significantly
improve if you know how to reduce these costs.
Why Your Business Loan Needs Lower Processing Fees
The processing fee may seem like an unstated expense when you apply for a business loan. You
discover an additional fee added at the time of disbursement, even though you thought you
were getting a great interest rate. You will have more money in your pocket if that fee is
lowered by up to 60%. It can assist you in starting marketing campaigns, hiring new employees,
or making equipment investments.
How Banks Are Providing Lower Fees
In Singapore, a number of lenders have implemented loyalty-linked discounts or promotional
periods. Linking reduced processing fees to accounts you currently own is one example. They
might waive a portion of your fee if you bank there or keep a healthy operating deposit.
Selecting a business loan that is packaged with other financial services is an additional scenario.
A significant amount of money that would otherwise vanish can be saved.
Actual Situation: The Founder of the Startup
Consider launching a food delivery business. To purchase delivery trucks and kitchenware, you
will need a S$200,000 business loan. You would have to pay S$4,000 for a 2 percent processing
fee. You only pay S$1,600 if that fee is reduced by 60%. You save S$2,400 up front. Instead of
sitting around doing nothing, you can use those funds right away.
Examining the Details
When you hear “up to 60 percent off processing fees,” you might assume that all the discounts
are the same. That is not true. “Up to” means just that. You must fulfill your requirements.
Opening a business account, keeping a specific balance, or fulfilling eligibility requirements like
revenue thresholds are a few examples. Asking your loan officer exactly what causes the
maximum discount to be applied will pay off.
Comparing This Market to Others
Similar trends are being observed by customers throughout the region. Banks have introduced
discounted corporate account processing packages in Malaysia and Thailand. Singapore’s
competitive finance industry and strong digital platforms make it stand out. Some foreign
lenders claim to have no processing fees, but they make up for that by increasing interest rates.
When assessing a business loan offer, you should look at both the fee and the interest rate.
What You Can Do Right Now
First, figure out how much borrowing will cost you overall. Compare more than just interest
rates. Include each of the following fee categories: processing, legal, valuation, and
disbursement. Secondly, request a breakdown of any “up to 60 percent” discount. Are you
receiving half or all of your savings? Third, engage in negotiations. Mention any existing
business ties you may have with your bank. Find out if they will match an offer from a rival.
Pay Attention to Promotions
Banks periodically update their loan promotions. After you apply, a 60 percent off promotion
might last until the following month. You ought to visit a branch or look at your bank’s website.
Ask your relationship manager to let you know if you have one.
When the Figures Do Not Add Up
Push back if, in spite of your expectations, you are not seeing much or any decrease in
processing fees. Talk to the manager or take the matter to a higher level. Banks monitor the
uptake of promotions. They want you to submit an application. You are entitled to the discount
if the documentation indicates that you are eligible. You are not requesting a favor. You are
abiding by the rules as stated.
Your startup or expansion expenses can be reduced by locating a business loan that offers
substantial processing fee savings. Carefully examining the circumstances and performing the
calculations pays off. Even if the discount only covers a portion of the cost, the total savings still
adds up. Every ringgit should support your business plan.
Speak with the loan officer at your bank if you have any questions or need assistance
understanding the terms. They can help you with the documentation process and provide
clarification on particular eligibility requirements.