From Singapore Business Review:
“Amongst small to medium enterprises (SMEs) in Singapore, 81% are not fit for business financing, consultancy firm Linkflow Capital revealed. According to the data from the firm, 863 of the 1065 users in its loan assessment platform are not eligible for financing. The most common reason for potential rejection of loan applications is SMEs’ reports of financial losses. Linkflow Capital said that 55% of recorded SMEs registered losses in their financials. Another reason is the age of the company. Around 21% of startups are incorporated in less than a year. Amongst small to medium enterprises (SMEs) in Singapore, 81% are not fit for business financing, consultancy firm Linkflow Capital revealed.”
The study done by Business Management Consultancy firm Linkflow Capital, showed that many SMEs’ current financial conditions fail to meet mainstream banks and financial institutions standards, in order to be eligible for financing. In addition, the bureaucratic and stringent nature of traditional banks makes it a long and tedious process in obtaining funding. SME schemes that the Singapore government provides often have strings attached, whereby some grants are specifically for research and development, while others are for hiring new employees.
Peer to peer loan applications and processing takes up a relatively shorter amount of time, smaller businesses also benefit as funding is easily obtainable compared to mainstream banks. The minimal paperwork and utilisation of online technology means that applications are reviewed much faster. The advent of P2P lending platforms and the benefits that they bring makes it a viable alternative that SMEs can look to for funding.