Critical Issue Faced By SMEs
SMEs play a very significant role in contributing to Singapore’s economy, 99% of the companies in Singapore are SMEs and they are the ones providing 65% of the country with jobs. It is undeniable that political and economic instability may arise at any moment, causing some people to feel more unwilling to borrow or invest in their business.Despite the numerous banks and grants that they can apply for, small businesses still look for alternative financing to fund themselves.A recent survey done by Business Times has shown that financing for SMEs is one of the major challenges that business owners face. In Singapore, bank loans have a fairly high interest rates and suppliers are tightening their credit assets and increasing need for collateral have made it difficult SMEs to gain potential financier.
The Future of Financing for SMEs
With the presence of competitive rates and rapid loan turnaround times, an increasing number of companies are relying on a specialized marketplace/alternative financing company such as Invoiceinterchange, to get funding quickly using their invoices through its advanced trading platform. This method of financing for SMEs has been booming after it was introduced to the market just a few years ago and well known for its swiftness and low fees.
As the numbers of SMEs continue to rise, the amount of companies looking to obtain immediate cash increases as well and so does the popularity in alternative financing. It is without doubt that the alternative financing for SMEs is always developing and becoming more and more mainstream as their platforms continuously improve and their business models expand, just as stated by the Bank of England.
Unlike traditional lenders, Invoiceinterchange financing solution is personalised to the needs of the business owner where flexibility and time is their main priority and most businesses can usually obtain the financing that they need within 24 hours of posting their invoice on the platform. Its ability to finance companies quickly and with transparent fees could enhance the financial stability for businesses by providing them the alternative method of gaining cash.
From this invoice trading platform, investors can also expect returns at about 10-20% annually. All invoices listed on the platform have strict requirements that they should meet and their financial information will also be carefully assessed.
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Promising Future for Alternate Financing
Since the introduction of this specialized trading marketplace in Singapore in 2015, it has quickly gained the support of MAS as in 2016, they started holding festival for Fintech companies annually that is attended start-ups, investors, financial institutions and government agencies. Additionally, MAS also has set aside about US$165 million for a five-year plan to cultivate Fintech and this project also aims to create 4000 jobs annually just from the industry alone.
Having the support and authorization from MAS, it has provided this relatively young market the credit and trust it deserves and it will also give them the room they need to further grow and become more innovative. As quoted by Ravi Menon, the managing director in MAS, “Financial technology is going to be the future of financial services. You just have to be discerning – not to be too wide eyed about it, but at the same time, not to be cynical about all new technologies. We should experiment with an open mind.”
Singapore Economy Statistic, link
3 Alternative Ways for Singapore SMEs to Get Funding, link