HSBC Malaysia has recently provided its first social loan facility to Bay Harbour Ventures Sdn Bhd (BHV), a special purpose vehicle by peer-to-peer (P2P) lender CapBay.
HSBC said in a statement on Wednesday that the social loan provided to CapBay via BHV will enable the company to simplify the access of funds to Malaysian small and medium-sized enterprises (SMEs) and will be key to connecting these SMEs to multiple liquidity providers to meet their financing needs.
Through this social loan, CapBay will be able to support and boost the growth of SMEs in Malaysia.
It is noted that SMEs are the backbone of the Malaysian economy.
Malaysia aims to increase its SMEs’ contribution to gross domestic product (GDP) from the current 38.4 percent to 50 percent by 2030, aligning with the average share of SMEs in the Organization for Economic Co-operation and Development (OECD) countries.
However, one critical determinant of SMEs’ progress is their ability to access financing and therefore, addressing financing challenges is a critical factor in fortifying the SME ecosystem.
This innovative solution provides flexibility in managing CapBay’s financing requirement, anchored by the portfolio of loan receivables of the client, allowing the client to monetize its receivables upfront, and to reinvest capital for growth, while enabling HSBC Malaysia and client to proactively manage the risk and health of the receivable’s portfolio.
“To unlock the potential of SMEs in Malaysia, it is key to establish an ecosystem where access to finance serves as an enabler across the business lifecycle,” said Christina Cheah, Head of Global Corporates and International Mid-Markets HSBC Malaysia.
Cited a recent study by the Institute for Capital Market Research (ICMR), she noted market-based financing plays a pivotal role, facilitating the allocation of capital that empowers SMEs to thrive and make significant contributions to Malaysia’s socio-economic development.
“The social loan provided by HSBC to CapBay is an example of an innovative solution which opens up access to capital liquidity for SMEs to fund their working capital requirements in a more efficient manner,” she added.
Ang Xing Xian, Co-founder and Chief Executive Officer of CapBay, said SMEs in Malaysia are generally underserved by banks and other financial institutions due to various factors, including the lack of collateral and sufficient statutory financial records for credit risk assessments.
“At CapBay, we complement the financial ecosystem by focusing on these SMEs — leveraging alternative data from the financial supply chain and our artificial intelligence (AI)-driven, proprietary credit-decisioning model to underwrite these businesses more effectively and provide broader, faster access to financing,
“We strive to provide smart and inclusive financing to businesses across Southeast Asia and are proud to partner with HSBC Malaysia through this social loan facility, which enhances access to funding for SMEs that are key drivers of Malaysia’s economic growth and socio-economic development,” he added.