P2P financing platform Funding Societies is offering deferment or rescheduling options to help tide small and medium enterprises (SMEs) over the Covid-19 crisis.
As of March, about 10% of Funding Societies’ SME clients have requested for rescheduling of their repayments, and the figure is expected to increase over the coming weeks, especially if the Movement Control Order (MCO) is extended.
Funding Societies Malaysia co-founder and CEO Wong Kah Meng said: “As we are all fully aware, SMEs are the backbone of our country, contributing close to 40% of the GDP and 66% of total employment.
“However, they are also the most vulnerable to a volatile economic environment, particularly amid this coronavirus ‘blackswan’ event that we are experiencing. On the other hand, we are also compelled to protect the best interests of our investors who, together with us, have been supporting these SMEs.”
The platform foresees slower economic activity in coming months and hence, an increase in repayment deferment requests from SMEs. It has been actively engaging with affected companies to understand how their businesses have been impacted and the implications on their repayment capacity in the near term.
It will propose deferment or rescheduling options to these SMEs to help them tide through this challenging period. “We strive for a win-win proposition for our SMEs and investors as it provides an opportunity for SMEs to recover and consequently continue to make repayments to investors,” added Wong.
Simultaneously, the platform has also been actively engaging with the Securities Commission and government agencies to identify potential approaches to support impacted SMEs and investors.
As P2P financing platforms focus on serving micro and small enterprises, which are most impacted and the majority of whom do not have financing from banks, these platforms are the most effective channel through which the government can reach out to and support these SMEs, Wong believes.
“Nevertheless, we are hopeful that this ‘blackswan’ event would serve as a catalyst to spur the next wave of digitalisation of businesses in Malaysia as well as the emergence of new digital business models, which directly will benefit the P2P financing industry given its digital focus,” he concluded.