Growing your SME beyond Covid-19 | Tips from our Experts (Part 3)

The Covid-19 pandemic has continued to impact the global economy with no signs of abating. Even in Singapore, SMEs continue to be hit by the lack of tourists, gathering restrictions and slower economic activity.

In the third part of this series, we speak to Vikas Jain, Senior Commercial Director from Funding Societies, on some of the biggest problems experienced by Singapore SMEs amid the Covid-19 pandemic, and solutions that SME owners can consider implementing.

More importantly, it is even more essential for SMEs to keep looking and moving forward. Jain provides some practical tips to help SME owners grow their businesses beyond Covid-19.

How to grow your SME beyond Covid-19: Advice from Vikas Jain, Sr Commercial Director, Funding Societies

Biggest problems faced by SMEs during Covid-19 pandemic

Many SMEs experience a shortfall of cash during the pandemic simply because businesses had to be shut, supply chains had to stop, and consumers could not consume. With their own business coming to a halt and their clients having difficulty making payments on time, many SMEs struggle to pay for overheads, rent, and worker salaries. Some are on the verge of pulling down their shutters for good, while others are fighting against that outcome.

It is obvious that many small businesses need credit. But many of them face difficulties obtaining funds from traditional financial institutions (FI) because of their low to zero credit track record and simply because they do not have time to undergo the tedious application process. SMEs can consider taking help from FinTech platforms, like Funding Societies, who offer faster and more flexible financing than FIs.

SME business owners can apply for loans entirely online in under five minutes with no paperwork required, and funds will be disbursed in as quickly as 24 hours. This cuts out the time otherwise required to process and wait for funds from FIs, which many busy business owners cannot afford to lose. These funds can be used as working capital or bridging funds to tide the businesses through their period of shortfall.

On top of that, many workers and jobs everywhere have been impacted heavily by the pandemic. Yet the impact is more profound on SMEs by virtue of their lack of resources and channels of revenue. Beyond the grants offered by the Government in the Jobs Support Scheme and COVID-19 Support Grants, businesses can also look to digital solutions to aid their survival and expansion. Newly-incorporated SMEs can explore the Start Digital Pack to begin their journey to digitalisation.

There are also other resources such as the Digital Solutions for Safe Reopening, Grow Digital, SME Digital Tech Hub, and Digital Project Management Services. There is also the Digital Resilience Bonus which uplifts digital capabilities of a broad base of enterprises, and covers aspects such as e-payment, inventory management, accounting and HR/payroll solutions, as well as data mining and analytics.

Tips to grow your SME beyond Covid-19

Aside from seeking financial help, I’d shared in a piece published last month that SMEs need to work on agility and adaptability especially in the face of supply chain shortage. Take the severely affected F&B industry for instance. By reaching out to food delivery platforms, some F&B outlets even managed to go beyond maintaining their sales revenue, and have done even better amidst COVID-19 by enabling delivery options available islandwide. An example is Forefront Medical, who hired 80 more staff to meet the increase in production demand. By pivoting into new markets and product ranges, firms can seize the opportunities presented in a new environment, particularly as companies in the region reshuffle their production and supply chains.

Employing the use of artificial intelligence (AI) is also another way to manage shortage of resources like manpower. AI can help to maintain efficiency levels even during work from home arrangements, and frees up workers to be reallocated to higher value-added activities that can contribute more significantly to the company’s growth. Such automation endeavours are also supported by the Government’s grants like the Enterprise Financing Scheme mentioned earlier.

SMEs can also look into upgrading equipment by adopting contactless payment methods and even getting some government bonus in the process.

The pandemic has made it clear that in a time where almost all human contact is prohibited, going digital is the only way to ensure business continuity even while physically apart. Online transactions like lending and payments are seeing huge spikes this year, so SMEs of all kinds and sizes must jump on the digital bandwagon in order to ride through any crises, unforeseen or not.

It is clear that the digital divide, compounded by the likelihood of economic downturns to drive a long-term gap in performance, makes the need for SMEs to achieve productivity through automation and digitalisation ever more apparent. If I may quote a McKinsey report ‘Your business context is and will remain uncertain. But if you get moving now, you can ride the waves of uncertainty instead of being overpowered by them.’

How Funding Societies can help SMEs

Funding Societies | Modalku is the largest SME digital financing platform in Southeast Asia. We provide business financing to small and medium-sized enterprises (SMEs), which is crowdfunded by individual and institutional investors.

Our tagline of Stronger SMEs, Stronger Societies echoes our mission of enabling fast and effortless financial access to worthy and under-served Small and Medium Enterprises (SMEs). According to the World Bank IFC’s estimates, there is a US$320 billion SME funding gap throughout Southeast Asia today. We are committed to improving societies in Southeast Asia through easy access to financing, and we achieve this by bringing SMEs and investors together on our platform.

To that end, we provide short-term, unsecured, and customisable financing to fit SMEs’ business needs. These come in the form of business term loans, invoice financing, and microloans starting as low as $500 to $2M per loan catering to all sizes and varied needs of the businesses. Many enterprises use these funds as working capital or bridging loans to scale their business operations.

Business owners can easily apply for financing on our website with little documentation required. The application process is simple and easy and the decisioning is done digitally through our proprietary credit underwriting model. For micro loans the decisioning is as fast as 2 hours and disbursal on the same day.

These business loans are crowdfunded from investors directly via our platform, whereby they invest into these SMEs and earn returns in the form of interest. As of 2020, interests earned by individual Singapore tax residents on our Singapore platform are exempted from tax.

We are democratising SME lending and retail investments by making funding accessible to the smallest of SMEs in Southeast Asia and investments starting as low as $20 which makes it affordable for almost everyone to invest.

As of Nov 2020, Funding Societies has given out more than $1.8 billion in loans across more than 3.3 million loans across Singapore, Indonesia and Malaysia. We are backed by shareholders such as Sequoia. Softbank, SG Innovate, amongst many others. Funding Societies’ direct lending entity, FS Capital Pte Ltd, has recently been included in Enterprise SG’s Enterprising Financing Scheme as a Participating Financial Institution, allowing us to extend our customisable financing solutions to even more SMEs throughout the region.