Funding Societies, Southeast Asia’s largest peer-to-peer lending platform, is spreading its wings to Thailand after securing a crowdfunding licence.
Founded in 2015, the lender has previously received crowdfunding licences in Singapore, Malaysia and Indonesia – supporting 65,000 SMEs in the countries with more than $1.5billion in funding. It was awarded a debt crowdfunding licence by the Thai Securities and Exchange commission earlier this month.
According to Funding Societies, more than half of Thailand’s three million-plus SMEs face multiple challenges in obtaining financing, especially to meet short term working capital requirements. With traditional financial institutions focusing on long term and asset backed (collateralised) loans, it leaves an SME financing gap of more than $40billion. Meanwhile, the coronavirus pandemic has seen lenders attempt to reduce their loan exposures in order to manage risk.
Funding Societies says the aim is to support Thai SMEs and startups in raising funds from retail and institutional investors. The company has also established regional partnerships with companies including Lazada, Zilingo and CIMB Bank.
Varun Bhandari, country head of Funding Societies Thailand, says: “SMEs contribute over 40 per cent of Thai GDP but face numerous challenges in accessing finance from traditional sources due to lack of collateral, onerous document requirements and lengthy approval processes.”
“By leveraging technology, Funding Societies offers SMEs a new avenue for raising financing that is fast, affordable and convenient. Thai investors will also get an opportunity to diversify their investments and earn attractive fixed income returns, while supporting local businesses and brands.”
On offer to SMEs is a range of collateral-free financing to support business expansion, working capital needs, or up-front project costs. Within three days, Funding Societies says SMEs can fill out an online application, submit basic documents and receive an approval.
Crowdfunding bonds offer diversification benefits, and can help enhance overall portfolio returns. Funding Societies’ strong risk management capabilities have restricted defaults to below two per cent, even through the Covid-19 pandemic.