P2P lending platform Funding Societies crosses S$1b in SME lending

PEER-to-peer (P2P) lending platform Funding Societies said on Wednesday it has given out more than S$1 billion in loans to small and medium enteprises (SMEs) across Singapore, Indonesia and Malaysia, since it started out in 2015.

It's the highest amount given out by any SME digital financing platform in South-east Asia, according to Funding Societies, which is backed by SoftBank Ventures Asia and Sequoia India.

The platform provides business loans to SMEs crowdfunded by individual and institutional investors. It specialises in all forms of short-term unsecured financing up to S$2 million, with funds disbursed as early as the next day.

In the past four years, Funding Societies has also facilitated more than one million business loans to SMEs through a base of more than 150,000 individual and institutional investors. Accounting for over 50 per cent of the volume of loans, Indonesia remains its biggest market, followed by Singapore and Malaysia. 

The growth in SME loans reflects the businesses' increasing openness to non-traditional lenders, said Funding Societies, citing a report by Ernst & Young, UOB and Dun & Bradstreet last year. 

“What SMEs need is not sub-prime banking, but a different banking," said Kelvin Teo, the co-founder and group CEO of Funding Societies.

In the last 12 months, the platform has expanded its loan volume by three times, while maintaining a default rate of 1.5 per cent. 

"It hasn’t been easy, as SME financing is a patient business," Mr Teo said, referring to how it takes time to get the right product-market fit and risk model. "We hope to work even closer with SMEs in 2020, in line with our belief of 'stronger SMEs, stronger societies' since 2015.”