There is a reason why alternative lenders still exist as some may offer value that banks cannot. This includes speed (as soon as same day) and acceptance of unique credit situations like low bank balances, length in business and weak credit score. Read why choose alternative lenders here.
Last year we wrote about 5 of them and this year we are glad to share new lenders that has risen to the challenge. Out of the 5 we wrote about last year, only 1 remain which goes to show how competitive the space has become for the betterment of SMEs.
Here’s a summary of this year’s list in no order of preference.
This is the only one that remained on our list from 2022. Funding Societies stands as Southeast Asia's largest SME financing platform, supported by both institutional and private investors. They are renowned for their prowess in short-term loans, specifically Micro Loans and Term Loans. These offerings cater to businesses' urgent financing needs, making Funding Societies a notable player in the lending industry.
Clients with short term and urgent needs and financing requirements of up to S$2mil. So, if pricing really isn’t much of an issue, I think Funding societies is a no brainer.
Fazz Financial previously known as Xfers is a dynamic player in the financial services sector from Indonesia. They are known for their innovative approach to digital banking and financial solutions. They bring a unique blend of modern technology and traditional financial services, catering to a wide range of financial needs for individuals and businesses alike.
If you have long had a strong credit record with the banks and are looking for a short-term financing gap urgently this might be a place to go. The ability to get funding of up to $300k at interest rates of 1.5% per month can be quite affordable. Think of this as a Funding Societies Premium. Suitable for those with more premium credit record (i.e. total debt obligations and repayment track record).
Validus Capital is another of my top choice and is a Singapore based Fintech that specializes in peer-to-peer lending for SMEs. They were founded in 2015 and have had multiple reiterations of their loan model. Right now, we think that they have found a good fit for SMEs. We call them the minimalist because of their overall low requirements which makes application a breeze.
For clients that are looking for something affordable, this is something to explore. They are slightly stricter on credit assessment and loan quantum, but pricing is unbeatable. With the ease of documentation, I say Validus has earned its spot at the top 5.
First started in Pahang Malaysia in 2004, Fundaztic has been supporting the SME market for a long time and understands the in and out of the SME loan market. The top peer-to-peer lender in Malaysia started operations here in Singapore in 2021 to do the same and has now grown to establish a name for themselves among the SME financing community. Why we call them the long lasting is because they are perhaps the only alternative lender that can do unsecured loans for 3 years. You heard me right, 3 years.
Patient clients who are willing to wait it out. Like with all things, nothing good comes easy.
This is an old non-bank name in the industry. Perhaps the oldest amongst the lot. Starting out as a leasing business, they are now very focused on property-backed lending in Singapore. Here, you will notice that Orix is significantly different from the other 4 lenders as their loan focus is not on unsecured business loan. Their property backed loan offers business owners an alternative to raise larger quantum of loans to pursue larger projects. Property-backed loans also offer cheaper sources of financing as low as 7.5% p.a (effective). If you are wondering why a non-bank property lender over a bank we detailed it here in our article.
Clients with a private property or commercial or industrial property with sufficient equity (i.e. Valuation minus outstanding loan amount). It is also ideal for clients who are looking for a larger quantum of loans with a lower price point. We didn’t add in any areas of improvement here because Orix is operating at an industry standard for their loan process. Either way, be prepared to deal with a bunch of unavoidable documentation as it has to do with taking a legal charge on your property.
In summary, Singapore's top five alternative lenders offer diverse solutions to meet financing needs. Validus Capital, Funding Societies, Fundaztic, Orix Leasing, and Fazz each have unique strengths catering to various segments.
Borrowers should consider factors such as interest rates, terms, and fees when selecting a lender. It's crucial to stay informed about evolving offerings and regulations in this dynamic financial landscape.
For a streamlined lending experience, consider reaching out to Lendingpot, your trusted loan broker. They can guide you in choosing the best lender for your specific needs.
Benjamin heads up Lendingpot with a background in all things SME. He was previously a commercial banker at Citi with experience in Relationship management, Credit Risk, Trade Operations and Corporate FX sales; and understands the difficulties SMEs face in this opaque world of SME financing.