Funding Societies achieves S$2 billion in SME lending
Funding Societies, Southeast Asia’s largest SME digital financing platform, today announced that it has achieved S$2 billion in SME lending across the region.
This milestone comes as the platform enters its sixth year of operations. The amount is partly crowdfunded by over 200,000 retail investors on its platform and has been disbursed through more than 3.7 million loans. As a result, more than 65,000 SMEs through Singapore, Malaysia, and Indonesia have received access to funding from the FinTech that they are otherwise unable to receive from traditional financial institutions. Funding Societies recorded S$850 million in disbursals in 2020 alone, while its overall platform default rate remained under 2% through the pandemic.
Digital financing platforms like Funding Societies provide quick, short-term financing to SMEs who are looking for customisable repayment schedules. According to Ernst & Young’s 2020 ASEAN SME Transformation Survey, 68% of the surveyed 1,200 SMEs across the six largest ASEAN countries – Singapore, Indonesia, Malaysia, Thailand, the Philippines, and Vietnam – are open to non-traditional lenders. The core appeals are speed and convenience; SMEs prefer the much faster and flexible loan approval process as well as an electronic know-your-customer (KYC) procedure, which typically do not require asset security or a visit to the bank branch.
Based on Funding Societies’ 2019 regional Impact study, which surveyed the FinTech’s impact on Singapore’s, Malaysia’s, and Indonesia’s economies, 72% of the respondents said their revenues would decrease if not for Funding Societies’ business financing. 84% of the surveyed small businesses had used the financing as working capital to pay for overheads, inventory, and business equipment, which were all crucial in their efforts to sustain operations.
Kelvin Teo (above), Co-Founder and Group CEO of Funding Societies, said, “We’re thrilled to reach this major milestone before we even realised it. It is a momentous occasion and encouragement for us. There is much more to do, as we continue to serve the needs of SMEs and Investors in the region.”
The Asian Development Bank estimates an annual trade financing gap of US$150 billion in Asia, and 60% of companies rejected for trade financing did not proceed with the trade because of the lack of funding.
In a measure to mitigate its portfolio risk in 2020, Funding Societies tightened its credit underwriting criteria to ensure only quality notes were crowdfunded, and focused on enterprises that were likely to thrive during the pandemic. These priority sectors included healthcare, medical supplies, and transportation to name a few. The FinTech saw an 18% growth in platform investors from January of 2020.
“We’re grateful to raise Series C funding last year, enabling us to further help SMEs even amidst uncertain times,” Teo continued.
Funding Societies recently launched in Thailand, its fourth market, making it the only SME digital financing platform to be licensed in four countries throughout Southeast Asia. The Fintech has more plans to further expand its domestic and regional presence in the near future.
