What is the meaning of private funds?

Private funds are banks, investment companies, and financial institutions that provide private financing. Private fund managers rarely participate in running a business. It provides the companies freedom to conduct their business in the way they deem best. The main purpose of a private fund is to extract attractive returns from their investment (mostly in the form of interest rates vary from 7-12%).

Only established businesses that are already generating good revenue, with a good credit track record, and massive potential for growth would benefit from this kind of funding. It is not ideal for startups.

However, the Singapore government has instituted micro loan programs from financial institutions like UOB, DBS, and OCBC that enable entrepreneurs to apply for loans with these financial institutions.

There are three types of private funds :

• Independent - This type of fund is set up by wealthy individuals, families or companies
• Institutional - This type of fund is set up by banks and financial institutions
• Corporate - This type of fund is set up by large companies. Large companies earmarked these funds for smaller company investments.