Funding Societies steps up to aid SMEs during Covid-19

Funding Societies, the largest P2P financing platform in Malaysia, steps up its efforts by offering deferment or rescheduling options to assist small and medium enterprises (SMEs) to ride the tide during the coronavirus outbreak.

During this challenging period, many businesses, especially SMEs are under tremendous pressure to manage their cash flow, inventory and distribution of goods and services.

The customised deferment or reschedulling option wil provide cash flow relief to SMEs who are struggling sustain their businesses, Wong Kah Meng, Co-founder and Chief Executive Officer of Funding Societies Malaysia said, adding that they are also compelled to protect the best interests of their investors who, together with them, have been supporting these SMEs.

“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,” Wong added.

“SMEs are the backbone of our country, contributing close to 40 percent of the nation’s GDP and 66 percent of total employment.”

According to Wong, they foresee slower economic activity in coming months and 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.

As of March, approximately 10 percent 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.

“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.

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 such, Funding Societies will  continue to closely monitor any developments that could further impact their SMEs and investors and offer help in any way possible.

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.

As of March, approximately 10 percent 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.

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