Micro, small and medium enterprises (MSMEs) contribute to more than a third of gross domestic product (GDP) with the figure expected to increase to 41 percent by 2020 and provide job opportunities to more than four million workers in Malaysia.
But, MSMEs face a major hurdle to expand their business further due to nsufficient cash flow and working capital to meet the business’s growth. Though, they are a critical component of the nation’s growth, they are very much neglected by traditional financial institutions due to their inability to fulfil the general requirements and their lack of “desired” collateral.
Today, underserved MSMEs have the opportunities to apply for micro-financing with fast approval in three days through Funding Societies, Malaysia’s first and largest peer-to-peer (P2P) financing platform.
Just like any other startups, Heron Solutions Sdn Bhd, which offers various home and business security solutions was unable to secure financing facilities from traditional financial institutions due to its inability to fulfil the general requirements. But, many entrepreneurs in the micro, small and medium segment encounter similar dilemma, which has proven to be a major stumbling block in the most crucial stage of their business development phase.
According to Ben Zainal, Co-founder of Heron Solutions Sdn Bhd, maintaining cash flow is crucial for all businesses, especially start-ups like theirs in order to cover a variety of business expenses, including staff retention cost and longer payment terms from clients.
Obtaining funds from traditional financial institutions such as banks can be difficult, as they have many requirements which cannot be fulfilled by small businesses. Furthermore, their approval process generally takes months which is also not viable to keep business running.
Microfinancing: The alternative solution for short-term financing needs
Fortunately for Ben, he came to hear of Funding Societies Malaysia through the radio, and was interested on the platform’s focus of looking into the sustainability and growth of businesses instead of collaterals as requirements for their financing application.
“I learned that the entire application process was really easy, smooth and efficient, including document submission. The process only required me to provide some contact information and upload minor documentation such as bank statement and NRIC without the need for collateral. Hence, I managed to secure short-term financing in just three days, finally enabling me to expand my business to neighbouring states,” Ben said.
Wong Kah Meng, Co-founder & Chief Executive Officer of Funding Societies Malaysia, said, “When we first knew about Ben’s business, we were inspired by his vision to be a leading provider in security solutions. Further, we were impressed with his strong business acumen, industry experience and the market traction he had achieved even prior to the financing application, and this gave us the confidence to further support his mission through P2P financing.”
Microfinancing is just one of many products offered by Funding Societies Malaysia with the aim to provide the much-needed financing support to MSMEs with financing amount of up to RM100,000 via a quick, seamless and hassle-free application.