As we pen this note, we understand the concern and uncertainty you’re likely experiencing from the escalating coronavirus situation. At Funding Societies, we remain committed to serving your needs during this time. We have been vigilant on our end, even prior to the Movement Control Order, and would like to share some of the efforts we have taken to safeguard your interest as an investor whilst ensuring that we remain a helping hand to support under-served SMEs who are being impacted.
We are cognizant that the outbreak has and will continue to have wide-ranging implications across industries and have incorporated them into our risk assessment processes. Some of the measures we have taken include, but not limited to:
- Assess the impact on SMEs’ financing needs – As we anticipate a reduction in business activity across most industries, we foresee a decline in financing needs and also repayment capability. This will generally be reflected through lower financing amounts per SME, in line with a reduced business volume
- Review of risk appetite – Given the uncertainty surrounding the macroeconomic environment, we will veer towards invoice financing, given the shorter tenure and relatively lower risk nature of the financing whereby it is aimed at financing completed business transactions. Likewise, we will maintain shorter tenures for term financing products to mitigate the risk of business viability over longer horizons
- Review of existing SME exposures – We are engaging with our existing SMEs to understand how their business is being affected and potential implications on their financing and, where applicable, seek solutions to reduce their exposures over time in line with reduced business activity and their repayment capability
- Implement monitoring & action plans for impacted SMEs – We will step up monitoring efforts on repayments from SMEs affected by the slowdown and, where justified, align on a repayment plan based on their latest financial position, whilst protecting the interest of investors from delinquencies – consistent with some of the actions taken by major financial institutions locally to help SMEs tide through these trying times
Notwithstanding the above measures, we will continue to closely monitor the situation and make further adjustments as needed. The current situation has no doubt impacted both SMEs and investors and, in weathering this challenging period, we strive to strike the right balance between increasing vigilance and stringency in our risk assessment process whilst still playing our role to support creditworthy SMEs.
As always, it’s an honour to have you on-board with us in driving greater access to financing for SMEs and we appreciate your continuous support.
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