Funding Societies: Survey reveals 72% of MSMEs in SEA boosted revenue with digital financing

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72% of survey respondents said their revenues would decrease if not for FinTech business financing

FinTech business financing

Funding Societies, Southeast Asia’s largest SME digital financing platform, on November 24th released its regional Impact study. To mark half a decade of the FinTech’s lending, its 2020 survey measures the social and economic impact of its funding to Funding Societies-linked MSMEs (micro, small and medium-sized enterprises) in 2018 and 2019 across Singapore,

Funding Societies | Modalku is the largest SME digital financing platform in Southeast Asia. It is licensed in Singapore, Indonesia, Thailand, and registered in Malaysia. It is backed by Sequoia India and Softbank Ventures Asia Corp amongst many others, and provides business financing to small and medium-sized enterprises (SMEs), which is funded by individual and institutional investors. In 6 years, it has helped finance over 4 million business loans with over S$2.5 billion in funding.

FinTech business financing is the reason for steady revenue growth

Indonesia, and Malaysia. 72% of the respondents said their revenues would decrease if not for the FinTech’s business financing. In its six years of operations, Funding Societies has financed over US$1.8 billion through more than 4.8 million loans to nearly 100,000 MSMEs in the region.

Applying the Multi-Regional Input Output global value chain (MRIO-GVC) method of estimating sectoral contribution, which is pioneered by the Asian Development Bank, the study also employs data collected from Funding Societies’ internal systems and user research to measure the lender’s impact. Sector, revenue, expense, depreciation, and employee numbers are among the data points factored into the programme that creates the outputs of Funding Societies’ survey.

FinTech business financing useful for working capital

84% of the surveyed small businesses had used the FinTech’s financing as working capital to pay for overheads, inventory, and business equipment, which were all crucial in their efforts to sustain operations. The SME lender offers micro loans from US$500 up to US$1.5 million, which can be disbursed in as fast as 24 hours, answering in a timely manner to SMEs who face the pertinent challenge of accessing business funds.  

One such SME is IncuBaker, a local shared cooking facility started by ex-armed forces officer Terence Ho. Terence required upfront capital financing but was rejected by traditional financial institutions:

“Traditional financial institutions thought it was too dodgy, so we were turned down. Funding Societies was able to bridge that gap for us. The whole application process took less than a week. The funds were disbursed in less than 48 hours. It was quick.”

Co-founder and Group CEO, Kelvin Teo, said, “My co-founder, Reynold, and I started Funding Societies to make a positive difference in Southeast Asia and we’re heartened to see the huge impact to SMEs over the past 6 years. We are looking to empower SMEs not just in digital financing but also solving their other pain points over time.”

FinTech business financing possible because SMEs are open to exploring other financial providers

According to a survey conducted by Ernst & Young, 16% of SMEs are open to exploring other financial providers including non-banks, and 68% said they are open to non-traditional lenders as the core appeal is a much faster loan approval process. 

“Other ways we are looking to create an impact is through ESG-related financing. It is in line with the government’s Green Plan, satisfies demand from our investors for sustainable investment opportunities, and frankly the right thing to do,” Kelvin continued. 

Blackrock’s 2020 Global Sustainable Investing Survey revealed that 54% of its global respondents consider sustainable investing to be fundamental to investment processes and outcomes, and 57% of APAC respondents stated that sustainable investing is already – or will become – central to their investment strategies. 

Funding Societies has launched its green loans product, in which it offers a 40% discount on interest on its unsecured micro loan offerings to small businesses that satisfy one of the following “green” criteria:

  • Green industry: company belongs to an industry that promotes environmental and climate solutions 
  • Green project: company is embarking on a project that has clear tangible outcomes for the environment and climate 
  • Green certification: company is working towards or already has an industry recognised green certification  

Mr Paul Ho, chief officer at iCompareLoan, said: “MSMEs who need financing should never settle for the first offer you get as it might not be the right fit for you.”

If your credit worthiness is suspect, getting start-up funding may be more difficult but certainly not impossible, especially if you have the right independent loan specialist to help you in your search. Ad the best news is, the services of an independent loan specialist is often free.

For starters, you should read up more so that you have some basic understanding of how an independent loan specialist can help you in your search for the right loan.

This is one good reason why you need to work with trusted loan specialists. Loan specialists are able to not only pre-qualify you with multiple lenders and compare rates and terms, they are also able to get you the best personal loans which has costs and payments that fit into your budget.

To lower the cost of borrowing, try to convince your lender to give you a better rate. You should negotiate with your lender and they may be willing to cut the interest rate to secure your business, and so the loan will cost you less. If you are uncomfortable about negotiating, you should engage the services of a loan specialist.

Loan specialists will not only be able to negotiate a better rate for you, they will also be able to help you compare the best personal loan offers from among the different ones given by the many banks. It also makes sense to engage loan specialists because their services are usually free.

It is perfectly normal for successful businesses to borrow money and be in debt. Also, borrowing money to make money is not really a new idea.

Written by Ravi Chandran

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