Generally speaking, SMEs in Singapore provide employment for some 70 per cent of the local work force. Understanding how the Government can better support a thriving local private sector, as well as prepare it for disruptions brought about by technological advances could benefit SMEs tremendously.
Of the four points stated in the article, the balance between preventing the abuse of grants/schemes and the ease of application for said grants/schemes for SMEs, stood out. At present, SMEs are still required to go through rather lengthy forms to submit an application and can be tedious for micro SMEs. This is due to multiple reports of abuse of the Productivity and Innovation Credit (PIC) Scheme.
Following that, the Government will monitor schemes with take-up rates as the primary metric. Particularly, where financing and managing one’s company’s cash flows are key issues for SMEs, the Government aims to streamline the process of application. One can expect loans to be more accessible for SMEs, where loan sums involved are possibly too small for SMEs to qualify or even apply for.
The P2P lending spaces have involved in the recent years in SouthEast Asia. Alternative lending refers to financial channels and instruments that have emerged outside of the traditional finance system such as regulated banks and capital markets. Alternative financing activities through online marketplaces are reward-based crowdfunding (e.g. Kickstarter, Indiegogo), equity crowdfunding, peer-to-peer (P2P) consumer and business lending, and invoice trading. In 2016, more than US$245 billion of funding was channeled through online alternative finance platforms across Asia Pacific (APAC), according to a report by the University of Cambridge, the Australian Centre for Financial Studies and the Tsinghua University.
According to the Singapore Fintech Association, a cross-industry non-profit initiative, there are 60 startups in the online lending and crowdfunding space.
The city state’s three major alternative finance players are peer-to-company (P2C) lenders which specialize in providing loans for SMEs. These are Funding Societies, MoolahSense and Capital Match. Funding Societies had raised S$95.4 million in loans through 1,606 campaigns, as of December 2017. The company, which also operates in Indonesia and Malaysia, has received US$7.5 million in funding so far. MoolahSense, which is backed by East Ventures and Pix Vine Capital, had raised S$41.3 million in loans through 359 campaigns as of December 2017. MoolahSense has over 11,920 registered investors. Capital Match, which was established in 2014, provides business and SME loans and invoice financing facilities of S$50,000 to S$200,000. The platform had funded S$62 million in loans, as of December 2017. Capital Match has raised S$1 million in funding so far from Innosight Ventures, Crystal Horse Investments and CE-Tech Invest.