SMALL and medium enterprises (SMEs) in Singapore’s real estate and construction industries will be able to obtain upfront, collateral-free financing, under a new offering named Really eZFunds.
Proptech startup Really Singapore has partnered peer-to-peer financing platform Validus to enable pre-approved working capital for SMEs that provide products and services to property owners and managers.
The startup, which offers a property management solution that is cloud-based and data-driven, said that its vendor marketplace comprises more than 3,800 suppliers in over 80 categories of services, including landscaping, building supplies, construction works, cleaning services and pest control.
“The majority of these SMEs are often unable to obtain the necessary financing to bid for projects, as they lack collateral or credit history to access traditional loans,” said Really Singapore in a press statement on Friday.
Really eZFunds will give these SME suppliers access to Validus’ pre-approved instant financing for up to S$50,000 at “competitive, bank-like rates”, according to the startup.
Higher amounts may be obtained within 48 hours of due diligence assessment.
In addition, property owners will receive 0.3 per cent of the loan amount as a one-off discount on the invoice amount from their vendors. This incentive, paid by the loan disburser, is meant to reduce property owners’ cost outlay in property management, said Really Singapore’s chief executive officer Joerg Zeugner in response to queries from The Business Times (BT).
“Further, asset owners will indirectly benefit from the due diligence done by a financial partner, of the creditworthiness of the vendor that they are purchasing services or products from,” he noted. Only vendors that pass the due diligence will receive a loan under Really eZFunds.
There is also a flexible pay-per-use arrangement, which allows a borrower to avail the financing, with a 90-day tenor, on a project level as and when it has been awarded a project, Mr Zeugner said.
“That can be when a purchase order or contract is issued, which is before the service delivery starts, so the loan can finance the service provisioning,” he added.
The second time and opportunity for a vendor to take out a Really eZFunds loan is at the time the invoice is issued.
“Usually, a vendor receives the invoice amount only after 30 to 60 days. But now the vendor will receive 80 per cent of the invoice amount as a loan within 48 hours, while the property owner and manager can assess and verify the invoices before they make payment,” Mr Zeugner said.
He also noted that the majority of SMEs in the property industry offer services with low or no asset involvement, which means they tend to be unable to comply with banks’ collateral requirements.
The collateral-free nature of the financing will thus enable the vendors to resolve some of their cash flow issues, while the property owners can get some assurance, Mr Zeugner told BT.
He hopes this offering can help SMEs become more efficient, productive and competitive, with the working capital supporting their tenders for more projects.
Validus chief commercial officer Anand Periwal said that the partnership with Really Singapore “reiterates Validus’ commitment to bridge the SME financing gap and to build a strong economic foundation for businesses to grow”.
Original Article at The Business Times