Funding Societies signs US$50 million credit facility with HSBC to drive Thai SMEs

It was amongst the first fintech to be awarded the debt crowdfunding license by Thailand’s Securities and Exchange Commission.

This represents a huge opportunity for Thailand’s nascent SME market, and digital finance players like Funding Societies can help accelerate the growth of many businesses and bring revenue back to pre-pandemic levels.

SMEs make up 97% of all enterprises in Southeast Asia bringing 40% of GDP value across the region. In 2018, a report by the Asian Development Bank Institute highlighted that Thai SMEs’ contribution to the local economy accounted for 45% of the total GDP (or seven trillion Thai baht), which was larger than the economic contribution from large-sized enterprises.

However, that figure dropped to 32% in the second quarter of 2020 before recovering to 34.5% in the fourth quarter, last year due to the pandemic. With the local economy expected to recover this year, led by business activities resuming, access to financing remains more crucial than ever.

Co-founder and Group CEO of Funding Societies | Modalku, Kelvin Teo, said, “We’re honoured to receive such a sizeable facility from a global bank such as HSBC. This marks a critical milestone for us and is a testament to our credit track record through Covid-19. HSBC’s foresight, global capabilities and scalable approach further equip us to better satisfy the underserved SME segments in the region, especially given Thailand’s potential presenting a huge financing opportunity for small businesses in the country.” 

Commercial lending in the Asia Pacific is projected to grow at a CAGR of 16.5%, generating a revenue of more than US$7 trillion (THB249 trillion) by 2028 - which makes up about 25% of the global market size of US$27.4 trillion (THB978 trillion).

The digital experience for SMEs is still underserved and is not at the same pace of digital transformation as with retail lending. Funding Societies has a track record of loan disbursement of over more than US$2.6 billion (THB92.7 billion) through more than 5.1 million transactions across the region.

Through this new credit facility, FinTech lenders will be able to channel the funds via its range of tailored financing solutions across SME segments in all five of its markets.

The signing enables HSBC to extend its global capabilities by tapping into the underserved segments across the region.

Furthermore, HSBC will act as the structuring bank, lender, facility and security agent in providing a flexible, scalable and pan-regional financing solution to support Funding Societies’ business expansion in the region.

Regina Lee, Head of Commercial Banking, HSBC Singapore, said, “As a leading SME digital financing platform, Funding Societies is playing an important role in contributing to Southeast Asia’s new economic growth by driving broader financial inclusion and supporting homegrown companies which are the building blocks of these economies. We are thrilled to support Funding Societies as they expand their reach to serving underserved SMEs in the region.”

This announcement comes at the heels of Funding Societies’ most recent acquisition of regional digital payments platform CardUp (subject to regulatory approvals), as part of a series of efforts to diversify its services beyond lending.

The digital financing platform also achieved several strategic milestones including its Series C+ equity raise of US$144 million (THB5.141 billion) in February, its recent investment into Bank Index in Indonesia, and market entry into Vietnam – its fifth market.