MoolahSense offers SMEs wider range of short-term loans

Singapore

MOOLAHSENSE, a homegrown peer-to-peer (P2P) online lending platform, has introduced a slew of flexible short-term financing solutions for small and medium-sized enterprises (SMEs). The move comes amid keener competition among similar platforms here.

And as financial institutions become more stringent with lending, P2P lending is seen as an attractive alternative source of funding for SMEs.

MoolahSense chief executive Lawrence Yong told The Business Times: "SMEs from different sectors have very different short-term financing needs. But the financing solutions currently offered by traditional lenders are either one-size-fits-all, or very costly if customisations are required."

Restaurants or retailers opening a new outlet and incurring initial setup costs for instance, can tap MoolahSense's Principal Repayment Holiday note where they will service only the interest in the first three months, then make equal instalment repayments of the principal and interests over the next nine months.

For manufacturers that have accounts receivables with customers via invoices or purchase orders, they can opt for a 3-6-month Bullet Note. This facility lets them repay the principal and interests in one lump-sum on a specified maturity date. Doing so unlocks working capital and lets manufacturers remain nimble to future business opportunities.

Said Mr Yong: "The innovation we bring forth is providing a myriad of up to 10 repayment structures. With each structure being modularised, SMEs can mix and match different note types to create the financing solution that best fit their needs."

Rival P2P lending platform Capital Match said that it already offers most of MoolahSense's flexible repayment options. These are in addition to factoring facilities, short-term financing, as well as loan brokerage services where it helps SMEs apply for bank loans.

New Union and Funding Societies (FS) - two other operators here - currently do not offer such flexible repayment schemes. Said FS: "It increases the riskiness of loans and is confusing to (lenders). We want to keep the repayment structure simple, understandable and safe for our (lenders)."

In response, MoolahSense's Mr Yong said: "With our latest enhancement, we fully automate the most extensive pool of repayment structures to fit every short-term financing need of SMEs, which we further value add with consultancy."

Mr Yong also expressed optimism at the outlook for P2P lending in Singapore this year. "With the uncertain global economy, many large financial institutions are reported to be systemically tightening on credit, in particular in SME lending. As a result, some SMEs are facing delays in payments and collections, even though they possess sound business models."

P2P lending as a "financial innovation" is thus well-positioned to grow and provide a meaningful alternative source of funding for SMEs, he said.

To date, MoolahSense has raised over S$5 million for SMEs; Capital Match, S$5.25 million; FS , S$3.7 million, and New Union - the oldest platform - S$31 million.

Last year, all four operators collectively called for a dedicated regulatory framework for crowd-lending.

BT has learnt that the Monetary Authority of Singapore (MAS) is still considering the feedback received since the close of its public consultation on facilitating securities-based crowd-funding in March 2015.

Said a spokeswoman on Tuesday: "MAS will issue our consultation responses in due course."