Micro loan questions

[glacier]

Hi, have been browsing through some of the posts and definitely learnt alot from you guys.

But I am posting first time as I do have some questions regarding application of micro loan.

Right now I am a sole proprietor. If I am applying for a micro loan, and approved, will that loan constitutes to be one of my personal financial commitments and contributes to my TDSR standing?

If I convert my sole proprietorship to a private company and apply for the same micro loan, will the banks consider my past financial credibility from the sole proprietorship and grant me the loan or it will not process at all, seeing the private company as an entirely new company?

Thanks!

[Strong Eagle]

As a sole proprietorship, there is no distinction between the business finances and your finances, and therefore, even if applied for through the business, it will be a personal financial commitment.

If you form a pte ltd, you could, in theory, have the bank grant you a loan in the company's name only. In reality, and even with a good track history, most banks will not make a loan to a pte ltd without the personal guarantee of the principle shareholder or managing director.

Therefore, you are on the hook for the loan, either way.

[glacier]

Hi Strong Eagle, thanks for your inputs!

Ok, that means getting a micro loan through my sole proprietor is out of question already, cos I am getting a HDB soon, I would not wish the loan to get in the way for the more important housing loan.

If you form a pte ltd, you could, in theory, have the bank grant you a loan in the company's name only. In reality, and even with a good track history, most banks will not make a loan to a pte ltd without the personal guarantee of the principle shareholder or managing director.

Do you mean good track history of a pte ltd?

And so even if I am going to have a pte ltd with the same company name as my sole proprietor that is to be overtaken (with all necessary admin, No Objection letter and assets transferral done), the bank will still consider it to be a new company with no ground and financial records to have any consideration of loan?

Ok, reason why these questions is, I initially wish to use my sole proprietor to get a loan, to use as a startup capital for another pte ltd I wish to set up. But also I do not wish the loan gotten from sole proprietor to be considered as my personal loan commitment, which I now know it is gonna be.