Tag

SME

Browsing

Why Invest in P2P Lending?

Many people are new to peer-to-peer (P2P) lending as an investment option. Questions arise. Is it trustworthy? Does it fit my needs as an investor? Who else have invested in it?

All valid concerns. Nearly no one wants to jump in blind when it comes to investing hard-earned money. Not billionaires, not angel investors – even they do extensive research prior to investing. People want examples of successful P2P investors and whether P2P lending works for their portfolio.

However, you’d be surprised by how flexible this form of alternative investment is.

Flexibility

Let’s start with individual or retail investors. Why is a relatively new investment opportunity so appealing to this segment?

The financial market can strike one as tangled, complicated, and unpredictable. Where does one even begin? P2P lending can feel like a breath of fresh air as it offers a much simpler concept. Basically, it is a form of alternative investment where investors collectively fund loans and earn interest-based earnings in return. Think of P2P lending as profitable crowdfunding! Where crowdfunding projects usually support charities and artistic ventures, P2P lending lets you collect attractive returns.

Due diligence and credit assessment guides your choices

Also, compare P2P lending with stock investment. Navigating the stock market requires expertise and research. Credible P2P lending platforms perform all the necessary due diligence and credit assessment to guide your investing choices, which saves time.

You still need to do some of your own research though, so you can decide for yourself which businesses you want to invest in. But overall, P2P lending jargon is more accessible compared to other investments.

Read Also: Three Key Risks of P2P Lending

alternative and affordable

Other bonuses? The affordable entry. At Funding Societies, you can invest in each small business with as little as SGD 100. P2P lending is also a profitable, with returns up to 14% per year.

It’s easy to see why individual investors are seeking alternative investments like P2P lending. Through it, you make passive income with ease and you earn higher returns from lower capital.

Read Also: 3 Alternatives To A Dividend Portfolio

More and more, P2P lending is gaining popularity. Respected media outlets such as Forbes have talked about its benefits. P2P infrastructure is thriving and all the indications point to one conclusion: P2P lending is here to stay!

This article was first posted on the blog of Funding Societies (Malaysia). Click here for the original article.

Funding Societies is a DollarsAndSense Brand Connect partner. If you are interested to know them better, you can find out more on what they do on our DollarsAndSense Brand Connect Page.

6 Different Types Of Alternative Investments You Should Consider

Whether you’re just looking, or starting out in investing, it will be helpful to understand the major instruments with which people tend to invest. This video gives an overview of 6 main investment options, as well as their qualities and characteristics. 

Read More: Starter’s Guide: 6 Different Types of Investments For You To Consider

Read Also: This App Can Help You Kick Start Your Investment Journey

Find out more about alternative investing at Funding Societies here.

Funding Societies is a DollarsAndSense Brand Connect partner. If you are interested to know them better, you can find out more on what they do on our DollarsAndSense Brand Connect Page.

 

How Technology Can Revolutionise The Way We Invest

The older generations love gold and properties as their mode of investment and method to hedge against inflation. With the advancement of the Internet and technology, the new generation of investors are now more well-equipped with information and new investment opportunities. This is especially so in recent decades, when the huge leap in technology opens up a whole lot of new sub sectors in the digital industry which can potentially revolutionise the way we invest.

Let us look into 5 growing digital sub sectors and how it can create new investment opportunities.

1. Crowdfunding

According to Investopedia, Crowdfunding refers to the use of small amounts of capital from a large number of individuals to finance a new business venture. Typically, crowdfunding is either reward-based or equity-based.

For reward-based crowdfunding, entrepreneurs or inventors will pitch their product idea to investors, in exchange for a free or discounted finished product. An example of such crowdfunding website would be Kickstarter, the world largest reward based crowdfunder where over US$2 billion has been pledged by more than 10 million people since they launched in 2009. Oculus Rift began as a Kickstarter project 3 years ago, and eventually raised US$2 billion. Pledgers of the project were promised to get the upcoming Oculus Rift for free (how we wish we knew this project back then!) However, this type of crowdfunding is not considered as an investment.

As for equity-based crowdfunding, investors can chip in for the projects in exchange for the equity of the firm. The more prominent equity-based crowdfunding platforms are Seedr and CrowdFunder. Locally, Fundnel also offers various funding methods for businesses and investors depending on their suitability.

Based on 2014 statistics, Asia is recording exponential growth in crowdfunding market, contributing 21% to the global funding volume. Globally, an estimated US$87,000 is raised every hour.

2. Peer-To-Peer (P2P) Lending 

P2P lending refers to a debt financing method which enables individuals to borrow or lend, without the traditional brick and mortar financial intermediaries. Investors can lend money to the businesses in exchange for periodic interest payment and the principal amount upon maturity. It is also known as social lending. Without the traditional financial intermediaries such as banks and finance companies, P2P lending narrows the interest spread between lenders and the borrowers which is beneficial to both parties.

P2P lending is usually deemed as risker as investors are lending their money to businesses that banks might have rejected their loans. However, there are many reasons why banks can reject a loan. And one of the main reason is that these SMEs do not have enough history of track records in earning ability or cash flows.

P2P lending platforms can help to assure the investors by doing first-round screening of the SMEs before posting them online. Financial information are also provided for the investors to do due diligence.

MoolahSenseFunding Societies and Capital Match are some of the P2P lending platforms in Singapore.

3. Bitcoin

Bitcoin is a digital currency (also known as crypto-currency) created in 2009 with the promise of lower transaction fee than traditional online payment methods. It is the most accepted digital currency and some businesses accept Bitcoin as a mode of payment for goods or services. Besides acting as a mode of payment, Bitcoin is also seen as a type investment for many people. However, price of Bitcoin can be very volatile. The highest recorded price was US$1,151 per Bitcoin in 2013 while the lowest was US$205 in 2015. As at 15 Feb 2015, price of 1 Bitcoin is at US$404.

To find out moreBitcoins Investopedia 

Screen Shot 2016-02-15 at 9.31.01 pm

4. Direct Purchase Insurance (DPI)

DPI enable consumers to buy basic life insurance policies directly from the insurance companies online, without having to go through financial advisors and hence, bypass commission charges. This initiative implemented by Monetary Authority of Singapore (MAS) to allow Singaporeans to have access to basic protection without any financial advice. Consumers can compare financial products offered by different insurance companies using online platforms like CompareFirst and take their time to decide which policy best suits them.

This initiative, together with vast availability of information online, people can make more informed choice and hence reduces the conflict of interest for insurance agents. The current commission based system might prevent some of the agents from recommend the soundest advice for their clients.

Read Also: Will Buying Life Insurance Online Be The Next Big Thing?

5. Ecommerce

Everyone loves Ecommerce. Yes, everyone, even the Durian sellers.

People love to buy things online for many reasons. It can be due to convenience, price competitiveness, price comparison or variety. The trend of buying things online is set to grow further and hence, listed ecommerce companies presents an unprecedented investment opportunities for the investors. The ecommerce sector is undergoing explosive growth, attracting US$112 billion worth of investments globally in 2014.

With increased connectivity and the advancement of technology, it spurs a new wave of innovation and the birth of new subsectors. This also presents more investment options hence moving investors away from the more traditional investment methods. It is worth looking more in-depth in digital sector than ever before.

To find out more about the digital sector, visit sgx.com/digitalsector

Source of top picture

5 Useful Tips To Keep Your Business Finances Healthy

A good financial condition holds your business together. Without the right financial management, a business is as good as doomed. Healthy finances allow your business to function smoothly. The thing is, not everyone is a financial guru. Chances are you’re not one either. But you don’t need to be a math genius to keep your company finances in check. Here are a few quick tips to help keep your finances healthy.

Track Your Expenses, Including Hidden Costs

What do you use your business money for? Whether it’s for office supplies, travel, employee meals, you need to track all your expenses. This applies for any hidden costs, too. For example, maintenance, upgrade, and training costs are not included in the price tag of new equipment, but they are costs nonetheless.

Once all the numbers are in front of you and you have taken the time to tally up total cost, you can easily make a proper financial plan, including a budget.

Read also: 5 Steps For Better Cash Flow Management

Establish a Routine

One of the most important habits to keeping your finances healthy is by staying organized. But you won’t be able to do that without a system or routine to keep you on track.

It doesn’t need to be complex, but having a designated time every day or every week to go through your bookkeeping will help you stay organized. After all, it’s better overall to keep an eye on your accounting once a week rather than letting everything build up over a few months.

Don’t Forget About Your Taxes

All businesses must pay tax on their income. Period. You need to start paying taxes from the time you make your first earnings. But the amount of tax you need to pay might vary, depending on your business and where you run your business.

Invest in Accounting Software

You might have already hired an accountant, but it’s always a good idea to invest in reliable accounting software. It can help you effectively track your finances and help you get an accurate picture of your profit, loss, and income statements. If possible, pick a cloud-based accounting software so that you can access your business financial data anytime and anywhere. This allows you to collaborate with your accountant or bookkeeper regardless of everyone’s current position.

Read also: Growing Your Business Without Breaking The Bank

Build and Maintain an Emergency Fund

An emergency fund is money prepared solely for emergency purposes. The money is intended to help you pay for things that wouldn’t be normally included in your regular budgets, such as an economic downturn or large increases in facility or material costs. Ideally, you need to save three to six months’ of expenses in an emergency fund, but we think it’s better to save more.

A healthy finance indicates a healthy business. To keep your business finances healthy, you can start with the five quick tips above and don’t forget – good accounting and bookkeeping habits are the basic foundations for your business financial health!

Find out more about SME Business Loans through crowdfunding via the Funding Societies.

Funding Societies is a DollarsAndSense Brand Connect partner. If you are interested to know them better, you can find out more on what they do on our DollarsAndSense Brand Connect Page.

Is Your P2P Platform’s Interests Aligned With Yours?

Peer-to-Peer (P2P) lending platforms earn fees from matching borrowers with investors, but investors bear the full risk if loans default. Thus, it is important for investors to pay attention to the risks associated with the ‘originate and distribute’ model and look for lending platforms whose interests are aligned with investors.

Watch this video to find out how to check if the interests of platforms are aligned with investors:

Read also: 5 Things That You Can Learn From How Temasek Holdings Invests And Builds Its Portfolio

Find out more about the peer-to-peer loan at Funding Societies here.

Funding Societies is a DollarsAndSense Brand Connect partner. If you are interested to know them better, you can find out more on what they do on our DollarsAndSense Brand Connect Page.

5 Steps for Better Cash Flow Management

Financing is the most important aspect of any business and smart entrepreneurs know that well-managed cash flow will prevent unnecessary costs and charges. Most business owners are aware of the importance of cash flow management, yet many have no idea how to do so. Whether you are a complete beginner or you want to get some more tips, read on for five steps to better cash flow management.

Read also: Growing Your Business Without Breaking The Bank

#1 Never expect quick payments

Have you ever had an experience when a customer did not pay you on time? It may not necessarily be because they are unable to pay the invoice. If your customer has ordered your product, it means that they are likely to have enough funds to pay for your goods. But unforeseen circumstances happen. Perhaps your customer has guidelines on extending payment terms. So it’s best never to expect quick payment on your sales. Instead, determine if you have enough working capital to keep your business running well in the event of payment delays. Remember the saying: hope for the best, but prepare for the worst.

#2 Read the details of your agreement

It’s rare to have a completely accurate invoicing process. However, understanding your customers’ payment processes or at least using the right purchase order numbers on every piece of communication can help you get paid on time. Carefully study the details of your payment agreement. Make sure you prepare everything you can so that your customers have no excuses to delay payment.

#3 Forecast your cash flow

Doing business without forecasting your cash flow is like driving a car in the rain without windscreen wipers: you can drive but you can’t see where you are going. Account for all expected incomes and expenses in the future.  Being aware of every completed transaction and updating your records accordingly can also help in managing your cash flow.

#4 Find the root of your cash flow problems

Analyze the root causes of your cash flow problem. Late payments are the most common cause of cash flow problems and financial mismanagement. You should also consider potential problems such as inaccurate invoicing, inconsistent pricing, lack of customer contact, or misunderstanding your customer’s payment cycles.

#5 Make use of technology

Ease your financing by using technology. Several software programs are available to help you manage your cash flow. This includes reminder notifications to help you ensure timely payment from your customers. Some software programs even help you to create consistent and professional invoices.

By having well-managed cash flow, you will be able to determine if you need financing support. Even beginners can improve cash flow management by simply incorporating these steps into their business practice. So, start working towards an optimised cash flow position today!

Find out more about the peer-to-peer loan at Funding Societies here.

Top Image

Funding Societies is a DollarsAndSense Brand Connect partner. If you are interested to know them better, you can find out more on what they do on our DollarsAndSense Brand Connect Page.

This New App Can Help You Kick Start Your Investment Journey

Peer-to-Peer (P2P) lending is growing part of investment portfolios in Singapore. This growing adoption is helped by FinTech companies like Funding Societies, which has a powerful yet easy-to-use platform that helps connect SMEs borrowers to a pool of willing lenders who lend them money in return for higher interest rates.

Read Also: 3 Reasons Why Peer-To-Peer Lending Should Be In Your Portfolio

For those new to P2P lending, check out this handy infographic:

Read Also: Three Key Risks of Peer-to-Peer Lending

As Singapore’s leading digital lending platform, Funding Societies provides P2P lending to SMEs in Singapore through an online marketplace, while giving individual investors the opportunity to lend your money for much higher returns.

In keeping with their goal to make investing easier and more accessible, Funding Societies has launched a mobile app so anyone can add P2P lending to their investment portfolio.

Through this app, you can check on upcoming investment opportunities as well as monitor the status of your portfolio wherever you are. If you’re not already a user of the Funding Societies platform, you can sign up and start investing from within the app.

The Funding Societies app is available on both iOS and Android devices. Do check it out and let us know what you think!

Funding Societies is a DollarsAndSense Brand Connect partner. If you are interested to know them better, you can find out more on what they do on our DollarsAndSense Brand Connect Page.

Top Image

Growing Your Business Without Breaking The Bank

Do you know that 99% of businesses in Singapore are small and medium-sized enterprises (SMEs)? They employ 7 out of every 10 workers and contribute over 50% towards the National GDP.

Yet only 1 in 20 SMEs gets bank financing. Why? Insufficient collateral and track record, staggering interest rates, or all of the above. The reality is that every business starts small and raising capital is a challenge. And in addition, startups are expected provide collateral, afford high interest rates, and have a proven track record, just to be able to get funded.

While traditional banks may be appropriate for big, established corporations, small businesses may be better served by a less traditional route, but one that has gained popularity and traction over recent years. Consider peer-to-peer (P2P) lending, also known as “social lending.” P2P lending allows for individuals to lend and borrow money directly from each other, doing away with the middlemen, financial intermediaries like banks. Just as it offers borrowers loans with low interest rates, P2P lending also benefits lenders (investors) with deserving returns.

How It Works

In a typical P2P lending scenario, you sign up to become a member at a P2P marketplace website. We at Funding Societies are among the first of such marketplace platforms in Singapore and South East Asia. Serving as the platform between borrower and lender, we take care of your borrowing and investment needs.

Borrowers

Before you can borrow from our pool of lenders, we first take some time to get to know you better. We look into business and credit records along with a personal interview to understand your business. Because we want to make sure everyone goes home happy, we only accept quality applications.

Let’s say you’ve been accepted (yay!). Our pool of lenders will see your approved application and make the decision to lend the funds to you. Once your loan is fully funded or funded to your satisfaction, the amount will be released to you.

Lenders

As a lender, you get to choose which ventures you wish to fund, and you can even spread your funds among several borrowers, spreading your risk. Because of the information transparency on our site, you’ll know what kind of business you’re lending to and to what end. You may sympathise with a particular industry’s story or venture, and the future success of the borrower and related industry can give you a sense of personal satisfaction knowing you contributed.

Getting Started

Whether you are a borrower or lender, you may look into P2P lending for your next venture and consider Funding Societies. We are a marketplace lending platform that facilitates funding objectives of SMEs who hit a roadblock when it comes to getting financing. From the borrower’s end, one business borrows from many lenders. From the lender’s end, one person lends to many small businesses, spreading and minimising risks. Investors or lenders get high returns (in comparison to most investment instruments) and borrowers get the loans they need at reasonable rates. And fast. All in all a win-win situation.

While we are confident in our mission, we realise that this operation comes with inherent risks and work with caution. In our efforts to mitigate any inherent or potential risks, we differentiate ourselves in that we work with a safer and less risky SME segment. With an interest rate of 10-20%, lenders can expect lower loan default. Being a marketplace platform, we are able to secure funds from not only retail investors, but also high net-worth individuals and institutional investors. From application to cash disbursement, the process time is short, with SMEs being able to immediately secure the minimum funding within days.

Our team is comprised of predominantly Southeast Asians, with a vision of making a positive contribution to the Southeast Asian societies, hence our name Funding Societies. Within three months since our incorporation in February 2015, we have put together a team of professionals, raised funds, and received large commitments from lenders. With access to the largest and most innovative marketplace lending players in the US and world-renowned thought leaders, and bringing into play the essence of the Silicon Valley startup culture, we work collectively to continually learn, deliver, and reinvent ourselves in this market.

Our customer service is rooted in our relationship with you. We are investing in our community and education to encourage discussion on relevant topics within the world of SMEs, safe borrowing, and investment, which is why you’ll see regular articles posted on our site blog. We have a dedicated team towards client service, ensuring that you will always be served and responded to in a timely way. Making the most of today’s technology, we operate efficiently to connect and facilitate the conversation among our community of borrowers and lenders (investors).

We understand that everybody starts somewhere, and it doesn’t matter where you are, our focus is to get you (the SMEs) the funding required to grow and for lenders (investors) the boost in returns you deserve. With your partnership, you’ll be helping us deliver our mission of serving local businesses and aspiring entrepreneurs. This is our social promise.

The thriving of our national economy is measured by the growth and success of its enterprises, small, medium, and big. Let’s work together not just for our individual accomplishments, but also for our collective progress as a community.

Read also: 8 Things to Ask Yourself Before Applying for a Business Loan

Find out more about the peer-to-peer loan at Funding Societies here.

One FinTech Company Hopes To Help SMEs Solve Cash Flow Challenges That Even Banks Have Problems With

SME and start-ups owners will be familiar with the challenge. Your business is doing perfectly fine but you need a short-term loan or a credit facility to tide over some cashflow matters.

You turn to your regular banks but are not familiar with the loans they are offering. They are covenants you need to adhere to, collaterals you need to put up for them, an existing credit history and other business documents that you may or may not have.

It’s a hassle and you only have two choice. Comply or walk away.

Funding Societies Bolt To Provide Fast And Secure Loans For SMEs

Local FinTech Company Funding Societies aims to solve this common headache of SME owners and fellow entrepreneurs by launching an app that allow users to apply for loans in just 2 minutes, through their mobile phone.

The app, called FS Bolt, is now available on both iOS and Android devices.

FS Bolt uses an automated credit assessment process that enables it to approve or reject loan application in just two hours. Once a loan has been approved, money will be disbursed within 24 hours of the loan application. This makes FS Bolt one of, if not, the quickest source of working capital loans that SMEs can tap upon in Singapore.

Read Also: 8 Things To Ask Yourself Before Applying For A Business Loan

Keeping It Flexible For Singapore’s SMEs

To keep it simple and flexible for SMEs, FS Bolt also provides loan tenor flexibility. Borrowers can repay their loan anytime they wish without incurring penalty for early repayment. This is a feature that many loan products in the market do not have. Such a feature provides incentives for borrowers to repay their loans quickly, with borrowers only paying the interest during the time the money was borrowed.

Different Products For Different Needs

Funding Societies is of course no stranger to supporting SMEs in Singapore. The company’s flagship product is its peer-to-peer (P2P) lending platform that helps connect SMEs borrowers to a pool of willing lenders who lend them money in return for higher interest rates.

The company has a rigorous credit assessment process and also practices what it calls “skin in the game” by having its founders and team investing alongside lenders in every crowdfunding opportunity.

Read Also: Three Key Risks Of Peer-To-Peer Lending

Choosing the Right Crowdfunding Product

Interested in raising capital through crowdfunding? We’re not surprised. After all, crowdfunding comes with some pretty sweet advantages. The crowdfunding process is cheap, quick, easy – often entirely online. Because crowdfunding requires no collateral, it is a great alternative to traditional funding such as secured loans.

As we discussed in our last article, there are three major forms of crowdfunding: rewards-based crowdfunding, equity crowdfunding, and peer-to-peer lending. To learn more about them and compare the different forms, click here.

Each form serves a different purpose and targets a different demographic, so it is crucial that you pick the right crowdfunding product. Which crowdfunding product is your match? Below, we have provided a handy list for you to use. Read on!

Rewards-Based Crowdfunding

  • Rewards-based crowdfunding is for you if you are trying to pitch a project. It is meant to raise capital for products or services. Its purpose is not to fund your overall business.
  • Rewards-based crowdfunding is ideal for those in the creative or artistic field, or those developing new products and technology to get market validation and pre-orders before starting production.
  • Most rewards-based crowdfunding campaigns expect to raise around $10,000 – $100,000 according to this article.
  • This is a crowdfunding form that requires effort on your part. You need to create a business plan for your brand and your project, you need to do research, think about legal and tax issues in advance, plan the rewards you will offer your supporters, and craft a compelling story or video to market your project and entice new backers. For more details, check out this Forbes article.
  • Costs include: reward and shipping costs, income taxes, and platform fees.
  • Key platforms include Kickstarter and Indiegogo. Coincidentally, Kickstarter has opened new branches in Asia, including Singapore.

Equity Crowdfunding

  • Equity crowdfunding’s primary purpose is to fund startups with strong growth potential.
  • Because equity crowdfunding is essentially a barter of company shares for funds, ask yourself: are you willing to part ways with your company shares? Are you someone who likes to be in control of your company? If you are indeed willing to let go of company stocks and are looking to raise a large amount of funds, then equity crowdfunding is for you.
  • Equity crowdfunding campaigns expect to raise somewhere between $250,000- $3,000,000.
  • Like rewards-based crowdfunding, equity crowdfunding requires effort on your part. Your startup may be very promising, but you still need to pitch its worth to potential investors on your chosen platform.
  • Costs include platform fees and of course, partial ownership of your business.
  • Key platforms include: AngelList and CircleUp.

Peer-to-Peer Lending or Debt Crowdfunding

  • Peer-to-peer lending provides loans with competitive rates and no collateral. Depending on your chosen platform, you can crowdfund personal loans or business loans.
  • However, peer-to-peer loans are especially useful for SMEs and the underbanked segment.
  • Ideal for small businesses searching for short-term credit to strengthen cash flow, to expand their companies, to finance a newly secured project, or just for operating expense.
  • Here’s an example: businesses with income tied in accounts receivable are a great target segment for peer-to-peer lending as they can have quick loans through invoice financing to start new projects while they wait to get paid.
  • A good option for younger, smaller, and revenue-generating companies, but with no suitable assets for secured loans.
  • Peer-to-peer lending campaigns expect to raise around $20,000-$500,000.
  • Requires less effort on your part compared to rewards-based crowdfunding and equity crowdfunding. Your chosen platform will do credit assessment to see if you are suitable for a loan and take care of the rest. You don’t need to market your funding needs.
  • Costs include platform fees and loan interest.

If peer-to-peer lending sounds like the crowdfunding product for you, you can learn more here and apply for a peer-to-peer loan at Funding Societies here.