Changing Small Business Financing in Singapore: The LendingPot Way

 
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but first..

What exactly are we trying to solve?

A realization struck me as I was prospecting a friendly ex-client. He lamented succinctly that the main problem plaguing small businesses in Singapore is actually the lack of qualified labour. The challenge of getting financing comes a close second.

Startups like Glints are trying to address the problems of labour & employment matching by providing disruptive services. At LendingPot, we attempt to do the same to the small business loan eco-system in Singapore.

Small businesses around the world face the same financing problems. Getting a business loan is both:

  1. difficult; and

  2. expensive

 
No smiles trying to get a loan in real life.  Photo credit:  stocksnap

No smiles trying to get a loan in real life.
Photo credit: stocksnap

 

Our expertise lies in financial innovation

中小型企业,融资难、融资贵。(SMEs financing is often, both difficult and expensive)

The truth is, the SME segment is often viewed by the banking industry as a cash cow. Due to the lack of options in the market, business owners often find themselves accepting any offered loans at any price points.

In my opinion, there aren’t enough commercial entities that act to help SMEs in an affordable way. Government assistance schemes are also difficult to navigate and industry associations may not move as quickly as desired.

LendingPot was conceptualized to address this problem by creating a Business Loan Marketplace.

 
Imagine loans in place of apples.  Photo credit:  stocksnap

Imagine loans in place of apples.
Photo credit: stocksnap

 

1. Getting financing is easy if SMEs can choose from multiple business loan offers, proposed by experts.

It is natural for relationship managers to prioritize their self-interest when proposing the latest promotional (read: highest commission) business loan product to you. It is up to business owners to decide if the suggested product can truly help your business.

However, business owners who choose not to accept the offer often do not have many alternatives, nor the time to continue the search.

LendingPot’s Business Loan Marketplace presents small business owners with multiple proposals from different financial institutions or banks with only one application.

This feature benefits small business owners by:

  1. educating them about the features of different types of business loan products

  2. understanding how each business loan product can potentially help them

  3. knowing the loan amount & interest rates that they are eligible for in the different banks/financial institutions

  4. saving them time from finding out the above information by applying to banks/financial institutions individually

If small business owners do not receive a loan offer from their preferred bank, their company may not eligible for it at that institution.

The marketplace is configured such that relationship managers can review the applicant’s business loan eligibility (but not their name & contact details), before any conversation.

This feature saves time for all involved, allowing for the efficient matching of banks and businesses.


2. Cost for financing can be reduced from increased competition.

By placing multiple RMs from different companies on the same platform, we incentivize competitive behaviour. Relationship managers will seek to do more in order to win your business.

Because of how similar business loan products are, this will likely result in:

  1. Lower interest rates or fees. Competition will be on price point.

  2. Improvement in service standards.

Small business owners will thus enjoy higher satisfaction levels when searching for business loans now.

 
Imagine the fruits as loan offers. photo credit:  stocksnap

Imagine the fruits as loan offers. photo credit: stocksnap

 

Conclusion

We believe small business owners will benefit from the Business Loan Marketplace as we provide a level playing field for business owners to search for financing and shift the onus to the RM to offer better service and pricing.



 
 

About The Author

 
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Eric Koh is passionate about helping SMEs grow and has spent years interacting with business owners at OCBC and IFS Capital. He is interested in 70s Rock n Roll, the odd novel and copious amounts of historical trivia.

Connect with him via eric@lendingpot.sg


Top photo adapted from: Freepik

 
Eric Koh