Funding Societies is one of the largest SME digital financing platforms that offer various loans for small and medium-sized enterprises. Learn more about Funding Societies here!
Small and Medium-sized Enterprises (SMEs) play a massive role in the economic development of a country. Hence, promoting SMEs is highly important to boost the urban and rural sectors as SMEs help generate employment, reduce poverty rate, encourage regional development, etc. Funding Societies is one of the largest SME digital financing platforms that understand the importance of SMEs and have helped hundreds of small and medium businesses over the years. In this article, we’ll take a look at how Funding societies work, services they offer, fees, portfolios, along with its pros and cons.
Funding Societies Overview
Kelvin Teo and Reynold Wijaya founded Funding Societies in 2015 to uplift small and medium businesses in Southeast Asia. It provides easy access to funds. Funding Societies enabled both SMEs and investors to be brought together in a single platform. Funding Societies provides SME digital financing and debt investment plans and has helped many SMEs grow their business over the years. Funding Societies was voted as the hottest startup in 2017 by Business Review.
Funding Societies offer various types of loans for SMEs, including term loans, microloans, invoice financing, supply chain financing, revolving credit financing, and property-backed financing. The SME digital financing platform covers small and medium businesses across Southeast Asia, including Singapore, Indonesia, and Malaysia, and is funded by institutional and individual investors.
How does Funding Societies Work?
At Funding Societies, taking a microloan of anywhere between $500 to $40,000 will not take more than two hours. Funding Societies is one of the largest peer-to-peer lending platforms in South East Asia. A small business looking for a loan at Funding Societies needs to fill in an application form with all details, including his contact details, business details, loan amount required, annual turnover, and so on. The credit risk team from Funding Societies will review the application and forward it to the investors. The investor network will grant the loan to the small business owner through the Funding Societies platform. Once the fund is approved, it will be immediately released to the business owner.
What Are The Services Offered By Funding Societies?
Funding Societies offers loans for small and medium-sized businesses with or without collateral. Funding Societies provides unsecured business financing loans up to $2 million. The various types of SME loans offered in Funding Societies include:
- Term Loans: Funding Societies provide unsecured loans to SMEs, meaning that no collateral is required for getting a loan. Even though it involves a risk factor, the credit risk team conducts a thorough analysis before approving loans to the borrowers.
- Invoice Financing: Invoice financing is based on the products/services that the business owner has provided to its customers. Hence, based on the invoice amount, a loan is disbursed to the borrower. Invoice financing is not highly risky when compared to unsecured term loans and lower returns.
- Microloans: Microloans are suitable for business owners and are one of the quickly processed loans at Funding Societies. While the application process is completed within 2 minutes, the loans will be released less than 24 hours after approval.
- Supply Chain Financing: Funding Societies offer pre-approved supply chain financing loans to suppliers to increase their cash flow in hand. For anchor buyers, extended payment terms are offered.
- Property-Backed Secured Financing: Secured financing up to $3 million is offered for business owners of property-backed funding. Even though these loans offer lower returns in the range of 4-8% per annum, investors are assured of their returns. If not received, they can even liquidate the properties to cover their losses.
Why Choose Funding Societies?
Funding Societies has helped a large number of SMEs grow and expand their business through digital financing. There are various reasons to choose funding societies:
- Quick access to funds
- Fast approval
- Get financing anywhere between $50,000 to SGD 2 million
- Low rates of interest
- No lock-in period (for a certain type of SME loan)
- No collateral is required (for a certain kind of SME loan)
- Customizable financing plans
- Ideal for all business entities
- Customizable repayment options
- Guaranteed periodic returns
- Low entry barriers and flexibility
- Minimal risk
- Investment diversification
- Returns on investment with Funding Societies is exempted from tax (Not applicable for foreign investors)
Funding Society Fees
For SMEs, Funding Societies charges fees based on the type of loan.
- For term loans, an origination fee of 3% to 7% is charged on the total loan amount.
- For Invoice financing, a utilization fee of 1% to 7% is charged on the total loan amount.
- For Microloans, an origination fee of 3% to 7% is charged on the total loan amount.
- For Supply Chain Financing, a utilization fee of 1% to 7% is charged every month.
For Investors, Funding Societies doesn’t charge a fee for creating a new account but charges 18% of the total interest earned.
Funding Society Pros and Cons
Here are the pros and cons of Funding societies:
Funding Societies offers a lot of benefits both for borrowers and investors, such as:
- Guaranteed revenue stream
- Risk diversification
- Excellent ROI
- Quick approval of loans (under 2 hours for certain types)
- Being a part of nurturing SMEs and economic growth of the country
- No equity investment options
- Investor fee of 18% is slightly on the higher side
Is Funding Society Safe To Invest In For Beginners?
Yes, Funding Societies is safe to invest in as the Monetary Authority of Singapore regulates them. It is also supported by some global investors like Sequoia India and Softbank Ventures Asia Corp.
P2P lending and digital financing have gained in popularity over the last few years and have played a considerable role in the upliftment of small and medium-sized businesses. Even though the model is relatively new, it is here to stay for a long time, as it provides a great set of benefits for both borrowers and investors. Funding Societies attracts not only borrowers but also individuals and corporate investors in large numbers.