Funding Societies And CGC Launch SME Portfolio Guarantee To Improve SME Access To Digital Financing

Funding Societies, Credit Guarantee Corporation Malaysia Berhad (CGC) have signed an SME Portfolio Guarantee (SME PG) agreement with the mutual objective of propelling the growth of Malaysian SMEs by providing easier access to financing.

Through the partnership, Funding Societies and CGC are extending the first tranche of financing up to RM10 million under the SME Portfolio Guarantee Scheme via Funding Societies’ leading digital financing solutions to benefit the underserved and unserved yet creditworthy micro, small and medium enterprises (MSMEs). The partnership also marks the first strategic collaboration between CGC and an SME digital financing platform.

Under this scheme, eligible SMEs can apply for financing between RM50,000 and RM500,000. SMEs that qualify for the SME PG will have access to longer-term financing and enjoy preferential interest rates, lowest among Funding Societies’ existing portfolio of financing from similar segments, easing their monthly cash flows as they grow their businesses, particularly in this post-pandemic period.

Kelvin Teo, Co-founder & Group Chief Executive Officer, Funding Societies | Modalku, remarked on the partnership, “We are pleased to strengthen our partnership with CGC via the SME Portfolio Guarantee agreement. With the PG in place, we would widen access to financing facilities for underserved and unserved SMEs in our key market, Malaysia. These SMEs may have a viable business model but lack the collateral to obtain financing via traditional financing channels. Our financing would support SMEs to either expand or sustain their operations, particularly as SMEs bounce back post-Covid in resilience. As for our investors, the SME PG also lowers the risks of non-repayment by SMEs.”

President & Chief Executive Officer, Datuk Mohd Zamree Mohd Ishak said, “CGC is pleased to launch this inaugural Portfolio Guarantee (PG) with Funding Societies, our first collaboration with an SME digital financing platform. This RM10 million PG will enable Funding Societies to offer the lowest financing rate and the longest tenure up to 60 months compared to the current tenure of up to 18 months to unserved and underserved MSMEs.  We are certain that this PG will create better access to financing for MSMEs via a digital platform.  In addition, CGC’s partnership with a non-traditional player will fortify the financial ecosystem which is crucial to gear up the growth and development of MSMEs.”

According to the Department of Statistics Malaysia (DOSM), the 1.2 million MSMEs represent 97% of the overall business establishments in 2021 and accounted for almost half of total employment in the same year. As the backbone of the Malaysian economy, SMEs’ ability to participate in the nation’s post-pandemic recovery is crucial for the country’s growth. To stay afloat, many SMEs have disposed of personal assets to sustain cash flow whilst having leaner operations. The introduction of government policies through support packages in the 2023 Malaysia Madani Budget, coupled with collaborations within the private sector, such as Funding Societies and CGC, will help sustainably advance the Malaysian economy.

The SME PG agreement was signed by Wong Kah Meng, Group Chief Operating Officer, Funding Societies | Modalku and Co-Founder of Funding Societies Malaysia together with Sean Tan, CGC’s Chief Business Officer. It was witnessed by Teo and Datuk Mohd Zamree.

For more information on the SME Portfolio Guarantee or Funding Societies’ Business Term Financing facility, please visit https://fundingsocieties.com.my/term-financing.

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