Helping SMEs build their business with P2P financing

WHEN you’re starting a small business, getting a bank to give you a loan is difficult because of the various regulatory requirements involved. Peer to peer (P2P) lending is an attractive alternative that can help remove the barriers.

In Malaysia, regional P2P digital financing platform Funding Societies has announced an alliance with United Overseas Bank (UOB), to provide P2P lending to small businesses.

Funding Societies is an online P2P platform that provides short-term collateral-free financing solutions. The platform connects businesses directly to individual and institutional investors.

Compared to traditional bank loans, P2P financing removes the laborious processes in between, allowing businesses to progress faster.

Using the Funding Societies platform, small businesses banking with UOB Malaysia can raise up to MYR500,000 (US$125,720) in capital directly from investors.

Raymond Chui Executive Director and Country Head of Business Banking at UOB Malaysia, said the bank is committed to supporting Malaysia’s small businesses at different stages of growth.

“We recognize that businesses in the early stages of growth can sometimes find it difficult to gain access to additional working capital due to a lack of collateral, credit history, or business track record,” he explained.

P2P financing is still relatively new in the region. In fact, Malaysia’s Securities Commission put in place a regulatory framework only in 2016.

Funding Societies is the first P2P financing service introduced in Malaysia. Based in Singapore, the company also has a presence in Indonesia, where it’s known as Modalku.

Through the partnership with UOB, Funding Societies hopes to raise awareness on how P2P financing complements the banking sector.

For small businesses, P2P financing can provide short-term support through challenging periods. This then acts as a bridge to other options for financing.

“As these businesses increase in scale and establish a track record, we will be able to extend a wider range of term-financing solutions to them,” Chui added.

In addition to financing, the bank will also be providing scalable digital solutions to help small businesses streamline and automate administrative systems and processes.

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