funding societies

Funding Societies Reaches Milestone of 1 Billion SGD in SME Lending

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Funding Societies*, an SME digital financing platform in Southeast Asia with presence in Singapore, Indonesia and Malaysia, Funding Societies has facilitated more than 1 million business loans to SMEs through a base of more than 150,000 individual and institutional investors in the last 4 years since inception in 2015. Funding Societies expanded its loan volume by 3 times in the last 12 month stating a default rate of 1.5%. Funding Society claims this to be the highest amount given out by any SME digital financing platform in Southeast Asia.

Funding societies founders Kelvin Teo and Reynold Wijaya
Funding Societies Founders Kelvin Teo and Reynold Wijaya

The growth in SME loans with Funding Societies is reflective of the increasing openness amongst businesses towards new generation funding options. As per the EY, UOB and Dun and Bradstreet report ‘Asean SMEs – Are you transforming for the future’, 67.8% of the SMEs are now open to non-traditional lenders including lending platforms. Alternative financing providers like Funding Societies are addressing this segment by providing technology backed funding solutions for the growth of local businesses.

Read an interview P2P-Banking conducted with the founders 4 years ago.

Kelvin Teo, Co-Founder and Group CEO of Funding Societies, commented, ‘What SMEs need is not subprime banking, but a different banking. We’re honored to have partnered with many SMEs in their growth journey. It hasn’t been easy, as SME financing is a patient business. We hope to work even closer with SMEs in 2020, in line with our belief of ‘stronger SMEs, stronger societies’ since 2015.’

Funding Societies specialises in all forms of short-term unsecured financing up to 2 million SGD, with funds disbursed as early as the next day. Funding Societies’ SME clients ranges from micro businesses and SMEs to small listed companies looking for working capital financing. For platform investors, the minimum amount is low starting from 20 SGD per investment. Other than individuals Funding Societies also has regulated financial institutions and funds who invest into loans on the platform.

Funding Societies is backed by Sequoia India and Softbank Ventures Asia Corp.

Interview with Kelvin Teo and Reynold Wijaya, Founders of Funding Societies

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What is Funding Societies about?

Funding Societies is a peer-to-peer (P2P) lending marketplace for small-medium enterprises (SMEs) to get loans to grow and investors to get good returns in Singapore. We pride ourselves on innovation, as the first and only platform in the region to implement escrow service, e-contracting, webinar, internet chat and more. Since our launch in Jun, we have crowdfunded ~3M SGD (approx. 2M EUR) in loans to 35 SMEs with 100% repayment. We aspire to be the most trusted P2P lending marketplace in Southeast Asia.

What are the three main advantages for investors?

As investors ourselves, we believe returns, convenience and security are critical. Therefore we offer an alternative investment that gives investors a much better return than traditional fixed income, through the convenience of a fully-online and hassle-free investment approach, with funds handled by a professional escrow agency for security.

What are the three main advantages for borrowers?

Having worked with many SMEs, we find their biggest constraints to be capital, time and energy. Therefore we strive to provide them with capital at competitive rates, fast speed-to-cash and best user experience with minimal effort.

Funding Societies FoundersWhat ROI can investors expect?

We target the SME segment structurally underserved by existing financial institutions. Our interest rates are just a few percent higher than banks’, to minimize adverse selection. We charge 9% to 14% simple interest and pass the full return to investors with only 1% service fee. With diversification, we believe investors can earn at least 7%, much better than deposit interest of 0.05% in Singapore.

How is your company funded?

We began by bootstrapping. Thanks to a talented and committed team, we achieved numerous awards within the first 6 months and received considerable attention from the investor community, including strategic VCs who share the same values with us and now fund us.

 Is the technical platform self-developed?

Yes, we built everything from scratch based on best practices we observed. It took us 95 days from start to launch, thanks to our talented CTO Felix Richard. Our goal is to deliver the best user experience, while ensuring security and scalability. Continue reading →