Funding Societies to provide RM840m financing via partnership with Carsome

The aim is to empower SMEs with short-term financing to help expand their businesses, particularly the underserved local used car dealers

by TMR/ pic by TMR FILE

FUNDING Societies Malaysia, the largest peer-to-peer (P2P) financing platform in the country and South-East Asia, has announced its partnership with Carsome by providing a total financing amount of US$200 million (RM840 million) to the region’s largest used car trading platform.

Through this collaboration, 1,600 used car dealers under Carsome could potentially benefit from the financing.

The partnership is in line with both platforms’ mutual aim to empower Malaysia’s small and medium enterprises (SMEs) with short-term financing to help expand their businesses, particularly the underserved local used car dealers.

Registered used car dealers on Carsome’s platform are eligible for financing of up to 70% of the transaction value of the used cars via a seamless and fast process.

Funding Societies Malaysia co-founder and CEO Wong Kah Meng (picture) said the firm’s tailor-made dealer financing product addresses the pain points revolving around used car financing traditionally.

“For instance, the requirement of 100% upfront payment by the SME and cumbersome documentation of business operations, among others, hinder these SMEs from expanding their business with limited cashflow.

“This is where we come in by providing a seamless process and, through automation and technology, speed up and lower the cost to serve the financing needs of these SMEs in a viable manner,” he said in a statement yesterday.

One of the main advantages of the dealer financing offered by Funding Societies is that it is open for application to any type of businesses, from sole proprietorships and partnerships to private limited companies, through Carsome.

Almost half the one million car units sold in 2018 were used cars, which points to a high demand for the industry. However, used car dealers often face issues when it comes to obtaining capital to expand their businesses as traditional financing avenues do not usually cater to many used car dealers that are sole proprietors.

This is where the partnership fills the gap by providing financing opportunity for used car dealers to purchase inventory in a seamless and hassle-free approach.

“We have seen great traction for dealer financing to date, where we have been partnering several car bidding platforms. Nevertheless, we are very much looking forward to this partnership with Carsome, as this will surely help us reach out further and serve many more SMEs under their platform,” Wong added.

Carsome co-founder and CEO Eric Cheng said the partnership will provide their dealers with a seamless financing product to help them grow and scale their businesses.

As part of the collaboration, Carsome will inspect the condition and verify the value and identity of the used cars before putting them up for bidding. By onboarding used car dealers with proven track record based on their repayment behaviour, business history and performance with Carsome, Funding Societies aims to better manage the risk to benefit their investors.

Funding Societies has disbursed more than RM30 million across more than 1,500 notes as of November 2019. Regionally, it has reached close to RM3 billion in total disbursed working capital to SMEs across South-East Asia since its establishment.