Funding Societies stands out from other P2P/Crowdfunding investing platforms and SME lenders for several reasons. From an investing perspective, the platform's asset quality (1.4% default rate, 85% on-time repayments) is unmatched.
|Summary of Funding Societies Investment Platform|
|One of the largest P2P/Crowdfunding platforms in Singapore with more than 2,100 completed deals totalling over S$110 million|
|Lowest default rate of P2P platforms (1.3%)|
|High on-time repayment rate (85%)|
|Low minimum investment per campaign (S$100)|
|Funding Societies' executives also invest through the platform, aligning their incentives with investors|
Table of Contents
- What Makes Funding Societies Stand Out to Investors
- Investment Opportunities at Funding Societies
- Investor Eligibility Criteria
What Makes Funding Societies Stand Out to Investors
Funding Societies provides an excellent opportunity for P2P/Crowdfunding investing in Singapore SMEs. In general, SME P2P/Crowdfunding investing presents added risk, compared to other investments, given that companies seeking this financing tend to do so because they do not qualify for traditional bank loans. This highlights the need for a platform like Funding Societies, which features the best asset quality of all platforms in our review. Its default rate (1.3%) matches those of high quality commercial banks and it features exceptional rate of on-time payments (85%). It has completed over 2,100 deals totalling more than S$110 million, which further supports its strong performance track record.
Additionally, Funding Societies founders and employees are unique in this space for investing in every opportunity on the platform along with their users, which indicates that the platform is incentivized to keep investors' best interests in mind. Finally, Funding Societies offers "Auto-Invest", a free tool that allows investors to automatically allocate funds to investment opportunities based on preferences of tenure, interest rates, and industry.
There are a few drawbacks of the Funding Societies platform. First, it does not offer equity investing. Also, its S$1,000 initial deposit, while standard for most platforms, is greater than few other platforms, such as MoolahSense that require S$500 less. Similarly, its 18% (of interest earned) investor fee is comparable to some of its competitors, but MoolahSense's investor fee (1% on total repayment) is generally lower for investments with durations of 6 months or longer.
Investment Opportunities at Funding Societies
Funding Societies offers investors a variety investment opportunities. These include short to medium-term unsecured business loans and invoice financing. The tenure of these investments options ranges from 3 - 24 months and 30 - 90 days, respectively. Funding Societies business loans generally earn 16 - 30% annual effective interest rates. Effective interest rates assume that investors automatically reinvest their capital as it is paid back throughout the tenure of the loan. Invoice financing tends to return 8 - 15% annually.
All of Funding Societies investments are unsecured, meaning that borrowers do not provide collateral for the chance that they cannot repay. This increases both the risk and the potential return of these investments. Invoice financing tends to present lower risk and returns than unsecured business loans, because invoice financing is based on the value of goods/services that the borrower has already provided and is owed from its customers. This makes the loan more likely to be repaid compared to business financing, which can be used for any number of purposes. Funding Societies requires that business loans are personally guaranteed (a legal promise to repay) by the director(s) of the borrowing company.
|Business Loan||Invoice Financing|
|Annual Returns Range||16 - 30%||8 - 15%|
|Investor Service Fees||18% of interested earned||18% of interested earned|
|Minimum Investment per Campaign||S$100||S$100|
|Loan Duration||3 - 24 months||30 - 90 days|
|Security||Unsecured||Secured and unsecured|
Investor Eligibility Criteria
- At least 18 years old
- Minimum investment per campaign S$100
- S$1,000 initial deposit
- Free application
Funding societies is easily accessible for most investors. For example, the minimum investment per campaign for both investment types is S$100, which is significantly lower than the requirements of some of its competitors. Additionally, there is no application fee. Finally, for investments yielding less than 15% with shorter than 6 months, Funding Societies' fee of 18% of interest earned is lower than MoolahSense's fee of 1% of all repayments received.