Funding Societies expands finance offerings for micro SMEs

  • Partners with Masryef Advisory, a Shariah advisor to ensure compliance
  • Shariah-compliant trade financing based on Commodity Murabahah

Funding Societies expands finance offerings for micro SMEsFunding Societies, the SME digital financing platform in Malaysia and Southeast Asia, introduced its Shariah-compliant trade financing solutions based on Commodity Murabahah (Tawarruq) for creditworthy and underserved Malaysian micro, small, and medium enterprises (MSMEs).

Wong Kah Meng (pic, below), co-founder and chief executive officer of Funding Societies Malaysia, said, “Despite their encouraging business performance, MSMEs have limited access to financing and are underserved for various reasons, some of which include low to zero credit track record, lack of assets to pledge, and lack of financial documents for credit assessment.

“This trend was further exacerbated during Covid-19 due to social distancing norms and limitations in meeting customers face to face, it became difficult for traditional financial institutions to provide loans to SMEs, notwithstanding stricter requirements in certain industries or products due to heightened risk,” he said.Funding Societies expands finance offerings for micro SMEs

Sharifatul Hanizah Said Ali, Securities Commission’s Islamic capital market development executive director, said “These digital solutions would facilitate connectivity by allowing issuers, investors, and intermediaries to access existing and new markets more efficiently and cost-effectively.” 

Increasingly MSMEs recognise the importance of utilising fintech and Islamic fintech (iFintech) to gain access to capital to ensure continuous operationalisation and expansion of their business activities Funding Societies said.

The introduction of Shariah-compliant financing complements Funding Societies’ existing broad range of financing products to serve creditworthy SMEs of all segments, vintages, and sizes, including those operating in the Halal industry, the company said.

Funding Societies said in 2021, the Malaysian iFinTech market was estimated to be valued at US$3 billion (RM13.18 billion).

Malaysia is categorized as a ‘market leader’ on the iFinTech Hubs Maturity Matrix with high growth and a high conduciveness, it said, adding that the country comes first on the Global Islamic FinTech (GIFT) Index.

“This represents an encouraging opportunity for both SMEs and investors. The gradual pick-up in economic activities and reopened borders coupled with anticipated elevated consumer confidence would translate into a more optimistic outlook as a whole,” said Wong.

In ensuring compliance with Shariah principles, Funding Societies partners with Masryef Advisory, a registered Shariah advisory company with the Securities Commission as its Shariah advisor.

Khairil Anuar Mohd Noor, principal at Masryef Advisory, said, "The underserved MSMEs can now have greater access to Islamic financing through the platform.

“We are proud to be part of Funding Societies’ journey into Islamic financing. Funding Societies has obtained a Shariah-compliant certificate from Masryef which would enable them to also offer Islamic financing solutions to the users,” he said. 

Funding Societies’ Shariah-compliant trade financing solutions enable Malaysian MSMEs who have been operating for at least a year to access zero collateral financing and a credit line of up to US$227,500 (RM1 million). 

Click here for more information on Funding Societies Malaysia’s Islamic Financing.


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