THE emergence of the COVID-19 pandemic has undoubtedly eroded and slowed down economic activity in the country.
The country’s small and medium enterprises (SMEs) are among those who have been hard hit by the various restrictions imposed by the Government to contain the spread of the coronavirus, thus leading to a loss in business revenue.
“In Funding Societies Malaysia, one of the trends we noticed during the pandemic is an upward trend of SMEs from F&B segments applying for micro-financing loans,” Funding Societies Malaysia co-founder and CEO Wong Kah Meng told FocusM.
Funding Societies Malaysia is the first and largest SME digital financing platform in Malaysia. The platform connects SMEs with investors through an online marketplace, thereby increasing access to financing for SMEs.
According to Wong, the digital financing platform plays an active role in the recovery of the SME sector by providing financing to credit-worthy SMEs to fulfil financing gaps when banks are shying away from giving out loans.
“We are also helping SMEs to digitalise their business operations through our Supply Chain Financing Platform (Silkroad) in addition to offering a seamless, quick and fully digital experience from application process right up to decisioning approvals and loan disbursements to SMEs,” he explains.
As of July 27, Funding Societies Malaysia have disbursed more than RM857 mil to help SMEs tide through the pandemic.
“As we understand the pain points and challenges of our SME community, we have also offered support in terms of creating a special deferment programme for impacted SMEs to help them sustain their cashflows and give them time to recover their businesses,” revealed Wong.
The special deferment programme allows issuers to defer their principal repayment for a period of up to three months. Issuers would only need to repay the interest portion during the deferment period.
“Funding Societies Malaysia has also been actively leveraging on strategic partnerships to reach out to SMEs digitally.
“In May 2021, we announced our strategic partnership with Foodpanda by providing vendors and food merchants with financing opportunities to obtain collateral-free, short-term financing solutions seamlessly on our digital platform.
“We have also partnered with the Malaysia Co-Investment Fund (MyCIF) for Social Enterprises, an initiative by the Malaysian government, to provide access to financing to social enterprises which are traditionally unserved by financial institutions.”
Taking into consideration that Malaysia is well on its way to achieving herd immunity and the global economy is gradually picking up again, Wong expects the P2P sector to gain wider awareness and adoption as a key channel for digital financing.
“Technological advancement in highly sophisticated artificial intelligence (AI) models and machine learning deployed in fintech risk management (in particular, due diligence and risk assessment of SMEs) will empower and continue to define the P2P and digital financing industry,” he says.
But the awareness of P2P financing isn’t anything new. In fact, recognition for the sector has grown by leaps and bounds since the issuance of operating licenses by the Securities Commission to six P2P financing platform operators in November 2016.
The ‘original six’ are B2BFinPAL, Ethis Kapital, FundedByMe Malaysia, ManagePay Services, Modalku Ventures (the company that operates Funding Societies Malaysia) and Peoplender.
In an interview with FocusM in 2019, Wong mentioned that these platforms have been able to fulfil the needs of underserved SMEs by addressing their working capital and cashflow issues due to lack of collateral or three-year track record requirement that is typically requested by financial institutions. – July 28, 2021.
