Cathay Financial, Indovina Bank, Finaxar tie-up to improve SME financing in Vietnam

VIETNAM’S small and medium enterprises (SMEs) can now access up to 500 million dong (S$29,220) in funds online, under a new cross-border partnership to improve access to SME financing.

Taiwan-listed financial services firm Cathay Financial Holding, Vietnamese bank Indovina Bank, and Singapore-based fintech lender Finaxar are collaborating to provide working capital to fast-growing SMEs in the region, the three parties said in a joint media statement on Thursday.

This will allow easier and more streamlined access to credit online, through Indovina Bank’s Finaxar Credit Line (FCL) product.

Powered by Finaxar, FCL is a completely online and automated credit-financing solution specifically tailored for Vietnam’s SMEs, in a first for the region, according to the statement.

Finaxar co-founder Vihang Patel said: "In our experience, small businesses in Vietnam face random demand fluctuations, which require them to have some form of capital flexibility, and this is where FCL comes in."

In Vietnam, SMEs account for 96 to 98 per cent of all enterprises, according to the joint statement.

The fintech lender aims to offer a full suite of innovative products to reinvent how business financing for SMEs is done, and to address the pain point of accessing credit for SMEs.

Business owners in Vietnam can now access up to 500 million dong through FCL.

FCL uses a simple model of charging a single percentage fee upfront on the loan amount, with no hidden or processing charges. In-principle credit approval can be granted within 30 minutes of an online application.

FCL does not require business owners to provide any collateral, and gives them flexibility in their repayment schedules.

This allows owners to grow their businesses in various ways, whether it’s procuring inventory or boosting general business expansion, the statement noted.

Finaxar provides data-driven financing solutions tailored to SMEs in South-east Asia. It is backed by Monk’s Hill Ventures, 500 Startups, Cathay Venture which is the venture arm of Cathay Financial Holding, alternative asset funds and family offices from Singapore, the US and Europe.

Finaxar is headquartered in Singapore and operates in Vietnam and Hong Kong.

Cathay Financial Holding offers banking, insurance and brokerage products. As at March 31, the financial services company had total assets of over US$309 billion.

Indovina Bank is a joint venture by the Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) and Cathay United Bank in Taiwan, which is wholly owned by Cathay Financial Holding.