Statistics Show High Demand but Poor Awareness of SME Financing Options

68% of the bank rejected SMEs are not aware of financing options beyond banks

Singapore, 3 September 2018 – 35% of Singapore SMEs surveyed by DP Information Group face finance-related issues, with 81% of these SMEs experiencing delays in payments.

According to the Institute of Policy Studies, Lee Kuan Yew School of Public Policy in National University of Singapore, while banks are nearly always the first institutions they turn to, 68% of SMEs do not know their financing options after they’re rejected by banks. 

Amongst the ones who know, Ernst and Young’s ASEAN SME transformation report cited that 67.8% of the survey respondents prefer non-traditional financing platforms due to faster turnaround time to access funds as well as more flexible credit underwriting.

These statistics display SMEs’ looming issue of cash flow management, as well as their openness and at times preference for alternative financing. The financing gap as well as more favourable mindset of SMEs has given rise to Fintech companies that aim to address such cash flow management issues as well as delays in payment from clients.

Two such up and coming Fintech firms are Funding Societies and CardUp.

Funding Societies is a Southeast Asia based SME Digital Financing platform which provides fast business loans to underserved SMEs to support them in their growth and expansion. These business loans, ranging from $5,000 to $2 million, are crowdfunded by more than 75,000 investors. The end to end process from submission to disbursal usually takes about 4-5 days but for certain products it can be as fast as 1-2 days. CardUp is an online card payments platform that provides instant access to pre-approved credit of up to 55 days, by allowing companies to make business payments with their credit cards, even if cards are not accepted. Unlike other payment platforms, CardUp does not require participation from the recipient of funds, allowing them to scale up very quickly. Over $55 million of payments have been created on the platform in its first 12 months of operations.

“Loan renewals were very quick, it took me just 2-3 hours (to get the approval)”, Nelson Ng, founder of World Snack, raises funds for his projects through Funding Societies’ crowdfunding platform. He adds that alternative financing is an additional channel to raise funds at reasonable rates.

Funding Societies’ mission and vision is to increase financial inclusion amongst SMEs in Southeast Asia. Kelvin Teo, Co-Founder of Funding Societies, comments, “Our focus on the SME segment allows us to deep-dive into SMEs’ pain points and innovate specifically to help them. We’ve funded more than 8,000 SMEs in the region, and hope all SMEs can consider Fintech as a worthy financing partner.” To date, Funding Societies has crowdfunded more than S$ 200 million worth of loans for under-served SMEs through innovation and speed.

There are many ways credit limits can be utilised properly especially in a small team to keep operations going smoothly, comments Jeremy Tan from Paula’s Choice and a business user of CardUp’s solution.

Through CardUp, businesses are able to tap on underutilised credit lines on their credit cards to pay for business expenses, such as payroll, rental and supplier invoices. Nicki Ramsay, CEO of CardUp adds, “We’re enabling businesses to optimise cash flow, digitise their payments and boost productivity, in support of the move towards a digital economy. With a wide range of fintech solutions available and heavy support from the government’s Go Digital initiatives, it’s an exciting time for SMEs.” CardUp has thousands of users on its platform, ranging from large enterprises to SMEs and consumers. Many SMEs who have used CardUp have benefitted from an increased cash flow cycle, as well as additional savings earned through credit card rewards. 

Both start-ups facilitate collateral-free financing for SMEs who may be asset-poor, unlike their larger counterparts. Funding Societies and CardUp not only work with each other but also with various partners in the SME ecosystem, to provide holistic and sustainable assistance to SMEs.

Such new-age alternative options available for funding are in fact complementary to offerings from banks and government grants, but are not very well known by the traditional SMEs at the moment. However, if the track record of Funding Societies and CardUp is any evidence then things are changing fast and with further growth of Fintech, the funding gap will reduce tremendously like it did in the West.

About Funding Societies
Founded in early 2015, Funding Societies is a licensed digital lending platform that connects small and medium-sized enterprises (“SMEs”) with retail and institutional lenders. It has achieved numerous milestones in a short span of time, including a USD 25 million Series B funding round led by SoftBank Ventures Korea and supported by Sequoia India, Alpha JWC Ventures and Golden Gate Ventures. Funding Societies has expanded into Indonesia (where it is known as Modalku) and Malaysia, becoming Southeast Asia’s #1 digital lending platform. Through its searing growth, Funding Societies | Modalku remains dedicated to the vision of funding underserved SMEs and improving societies in Southeast Asia.

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About CardUp
CardUp is an online card payments platform for cash management that enables any payment made by bank transfer today to be shifted to a credit card, regardless of whether the recipients accept credit cards. For businesses, shifting expenses such as payroll, office rent, supplier invoices and more to their credit card via CardUp provides instant access to interest-free credit of up to 55 days, increasing their access to working capital, improving their cash flow and digitising processes at the same time.

Launched in late 2016, CardUp is backed by well-known investors and venture capital firms including Sequoia Capital India and SeedPlus and has established partnerships with major banks and credit card providers including UOB, Bank of China and Mastercard.

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Funding Societies is Southeast Asia's leading SME digital financing platform. We specialise in all forms of short-term financing for SMEs, funded by individual and institutional investors. We pride ourselves in speed and flexibility, offering the widest range of term loan, trade finance and micro loan products. Backed by SoftBank Ventures Asia Corp and Sequoia India, amongst many others, Funding Societies has helped to finance over S$2 billion in business loans regionally. We are dedicated to the vision of enabling SMEs through equitable financial access, ultimately making a positive impact for our societies in Southeast Asia.

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