Nearly seven in 10 SMEs in Southeast Asia rely on startup capital from savings, family and friends: SME Industry Report

Study uncovers the need for a solution to improve cash flow management for SMEs

High interest rates and dissatisfactory experience spur SMEs to switch brands

Singapore, 10 October 2023 – In Southeast Asia, about 70% of SMEs (small and medium enterprises) started their business with seed money raised from their personal savings and from family and friends’ financial support – particularly in Indonesia, Malaysia and Singapore. This finding stood out from a report published by Funding Societies, Southeast Asia’s largest unified SME digital finance platform.

Funding from traditional banks consists of 23% while the remaining 7% turned to alternative sources such as FinTech companies. SMEs in Malaysia had the weakest access to financing from traditional banks (17%) and alternative lenders (3%). Inversely, those in Vietnam had the strongest access to alternative lenders (25%).

To better understand how these businesses think, Funding Societies surveyed nearly 980 SMEs in Indonesia, Malaysia, Singapore, Thailand and Vietnam – all of which are countries the company operates in. The report comprises respondents under the SME category, including micro (74%) and are business owners themselves (63%) – surveying both customers of Funding Societies’ (59%) as well as non-customers (41%).

Southeast Asia’s economy is on the road to recovery, after contracting during the pandemic; and despite recent macroeconomic headwinds, the region is still less impacted in comparison to other parts of the world. These factors have brought about innovative solutions for SMEs by both traditional and digital financial companies. Yet, the abundance of choices does not mean greater ease in accessing finance.

Kelvin Teo, Co-founder & Group Chief Executive Officer, Funding Societies | Modalku said, “The survey confirms and furthers our understanding of SMEs to serve them better, by simplifying financing and moving beyond to cash flow management, which is being accomplished with our proprietary platform solution Elevate.”

Payments by SMEs: reliance on banks; transactions made locally

Bank transfer remains the most popular payment method for SMEs with nearly 90% paying their suppliers and 88% receiving payments from customers through the same method. However, cash transactions still play a big role with:

  • 51% of respondents in Indonesia paying suppliers and receiving payments from customers

  • 63% of respondents in Malaysia receiving payments from their customers

Even though the majority of transactions with both customers and suppliers were done locally, 20% of respondents indicated that cross-border transactions were important for them. This sentiment was seen strongest in Singapore and Vietnam with more cross-border transactions than the other countries.

Business Term loans, a top choice with SMEs; while woes over paying their suppliers 

Business term loans were cited by respondents as the most used products (49%). There were exceptions in Singapore and Vietnam though, where card payments are more common in both countries (51% and 49%).

Looking at how these products contributed to an SME’s finances, respondents cited business terms loans as their biggest contributor (41%) – Indonesia and Malaysia attributing 66% and 63% respectively. On the flipside, Singapore SMEs leaned towards credit card payments (33%). 

Most SMEs surveyed were more concerned about payables, particularly their capacity to pay suppliers. More than a third of the respondents listed access to financing (including loans and credit cards) and fulfilling payments (to suppliers or vendors who may not offer flexible payment options) as their top payable issues. Other concerns included:

  • Payables monitoring and reporting

  • Getting approval for payments

  • Matching invoices against purchase orders and receipts

Singapore was the only exception, with respondents saying receiving payment from customers is a more critical issue.

Other behaviours of SMEs found from respondents

Across the region, respondents said that their biggest expenses were for daily operations (32%) and inventory and supplies (32%). However, Vietnam deviates slightly from this observation; where the largest expense after daily operations is employees’ salaries.

Low interest rates are a significant factor influencing SMEs to switch brands, especially in Singapore. It was found that more than half (62%) of SMEs in the region are likely to switch brands due to their dissatisfaction with the experience offered – with the most likely in Indonesia and Singapore. 

SME Digital Finance and Payments Behaviours: Southeast Asia Report 2023 aimed to look into the behaviours and challenges SMEs are facing and how using digital financing and payments can capture business opportunities and efficiencies.

For full access to the report, click here to download. 


  1. The sample size in Thailand is relatively small, insights derived from this segment should not be taken as representative of SMEs in the country.

  2. Elevate is a cash flow management platform that offers cash flow insights, integrated with a card, business account, payables, receivables and financing.


About Funding Societies | Modalku
Funding Societies | Modalku is the largest unified SME digital finance platform in Southeast Asia. It is licensed in Singapore, Indonesia, Thailand, registered in Malaysia, and operates in Vietnam. The FinTech company provides US$1 billion annually of business financing to small and medium-sized enterprises (SMEs). Its recent strategic milestones include its acquisition of regional digital payments platform CardUp and co-investment into Bank Index in Indonesia.

Funding Societies | Modalku is backed by SoftBank Vision Fund 2, SoftBank Ventures Asia, Sequoia Capital India, Alpha JWC Ventures, SMBC Bank, BRI Ventures, VNG Corporation, Rapyd Ventures, Endeavor, EBDI, SGInnovative, Qualgro, and Golden Gate Ventures among others. It has received accolades from Brands for Good (2019, 2023), Global SME Excellence Award, Global SME Finance Awards by IFC (2021-2023) Global Startup Awards (2020), MAS FinTech Award (2016, 2021) and more.

Media Contact
Joachim Leong
Assistant Manager, Regional Public Relations


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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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