Funding Societies and Cheng & Co have engaged in a strategic partnership to broaden and simplify access to business financing for creditworthy Malaysian small and medium-sized enterprises (SMEs).
Cheng & Co, a leading and established home-grown accounting firm, will refer promising SMEs in need of financing to Funding Societies, the first and largest peer-to-peer (P2P) financing platform in the country. In turn, Funding Societies will provide working capital to eligible SMEs through its investor base.
The arrangement is subject to SME customers’ consent and is the first partnership between a P2P financing platform with an accounting firm in Malaysia.
P2P financing platforms such as Funding Societies connect SMEs with investors through an online marketplace, thereby increasing access to financing for the SME sector. By investing into SMEs, investors could earn returns up to 14% per year, higher than fixed deposits, bonds, and other traditional instruments.
Meanwhile, SMEs could obtain up to RM500,000 in working capital financing to expand their business through a fast and simple online-based process. SMEs do not need to provide collateral as part of the financing requirements, while interest costs are minimized due to short financing tenors.
According to estimates cited by the Securities Commission, the Malaysian SME sector has a financing gap of more than RM 80 billion. Market-based financing like Funding Societies, may provide alternative solutions to address the financing needs of Malaysian SMEs.
Tom Wong, CEO of Cheng & Co Group, said: “P2P financing is gaining popularity as an alternative finance option for SMEs. Malaysia even became the first country in ASEAN to regulate P2P financing in November 2016. We believe our partnership with Funding Societies will help our creditworthy clients raise working capital financing for business growth. The collaboration aligns with Cheng & Co’s mission to provide innovative and value-added solutions for our customers on top of our auditing and financial advisory services.”
Cheng & Co will organize 2018 Budget and SME Business Innovation seminars throughout Malaysia together with Funding Societies to educate SMEs on alternative funding options to bridge cash flow gap and Cheng & Co’s business assurance services.
Wong Kah Meng, CEO of Funding Societies Malaysia, stated: “One of the main challenges SMEs face when applying for financing is lack of up-to-date and comprehensive financial statements, thereby delaying the application and approval process. Our partnership with Cheng & Co would help address this pain point and in turn would free SMEs to focus on what’s most important: running and expanding their business.”
“Additionally, the partnership will help us improve customer experience and shorten approval time when applying for financing with Funding Societies. This provides more SME investment opportunities for our investors and the ability for investors to utilize their funds and diversify their investment portfolio. Funding Societies aims towards a two week timeframe between application to disbursement of SME financing.”