Lending

Funding Societies Offers SMEs Deferments to Help Ease Cash Flow Challenges

Funding Societies, P2P financing platform, is stepping up efforts by offering deferment or rescheduling options to help tide small and medium-sized enterprises (SMEs) over as they face challenges brought on by the coronavirus (COVID-19) outbreak.

Following first quarter of 2020, the outbreak has already caused a further economic challenge, placing additional pressure on companies that were already faced with an uncertain business outlook. Among these businesses, SMEs especially are the most vulnerable as they struggle in managing their cash flow, inventory and distribution of goods and services during this trying time.

The customized deferment or rescheduling option will provide cash flow relief to SMEs to sustain their businesses and, in turn, safeguard jobs, particularly in adversely affected sectors including offline-focused retailers, wholesale traders and manufacturers involved in imports and exports, construction of new projects, and tourism and hospitality.

Wong Kah Meng, Co-founder and Chief Executive Officer of Funding Societies Malaysia, said,

Wong Kah Meng

“As we are all fully aware, SMEs are the backbone of our country, contributing close to 40% of the nation’s GDP and 66% of total employment. However, they are also the most vulnerable to a volatile economic environment, particularly amid this coronavirus ‘blackswan’ event that we are experiencing at the moment. On the other hand, we are also compelled to protect the best interests of our investors who, together with us, have been supporting these SMEs.”

“We foresee slower economic activity in coming months and hence, an increase in repayment deferment requests from SMEs. On this note, we have been actively engaging with affected SMEs to understand how their businesses have been impacted in the current circumstances and implications on their repayment capacity in the near term. From there, we will propose deferment or rescheduling options to these impacted SMEs to help them tide through this challenging period. Through this, we strive towards a win-win proposition for our SMEs and investors as it provides an opportunity for SMEs to recover and consequently continue to make repayments to investors,”

added Wong.

Simultaneously, the platform has also been actively engaging with the Securities Commission and government agencies to identify potential approaches to support impacted SMEs and investors. Given the sudden and wide-reaching implications on business activity, government support and funding are critical to ensure that SMEs are able to tide through these times. As P2P financing platforms focus on serving micro and small SMEs, which are most impacted and the majority of which do not have existing financing from banks, P2P financing platforms are the most effective channel through which the government can reach out to and support these SMEs, consistent with the sentiment across the FinTech industry globally.

“Nevertheless, we are hopeful that this ‘blackswan’ event would serve as a catalyst to spur the next wave of digitalisation of businesses in Malaysia as well as the emergence of new digital business models, which directly will benefit the P2P financing industry given its digital focus,”

Wong concluded.

As of March, approximately 10% of Funding Societies’ SME clients have requested for rescheduling of their repayments, and the figure is expected to increase over the coming weeks, especially if the Movement Control Order (MCO) persists. As such, the platform continues to closely monitor any developments that could further impact their SMEs and investors and offer help in any way possible.