Funding Societies secures third credit facility with HSBC to extend access to MSMEs in Southeast Asia

Funding Societies | Modalku (Funding Societies), the largest unified digital finance platform for micro, small and medium enterprises (MSMEs) in Southeast Asia today announced signing the third credit facility with HSBC under its ASEAN Growth Fund. The overall transaction, an accumulative commitment of over THB 3.4 billion (US$100 million), also includes the two annual credit facilities extended to Funding Societies, reaffirms HSBC's continued support for MSMEs through the platform since 2022.

This transaction, which is amongst HSBC's largest asset-backed secured facilities extended to digital SME lenders in Southeast Asia, will further deepen and extend Funding Societies' reach to providing credit access to underserved MSME segments in the region.

While the Asia-Pacific (APAC) region has grown its middle-class and gained tremendous traction in terms of increasing access to formal banking services and digitalising its commercial environment, the region still has a US$2.5 trillion credit access gap, making up over half of the global shortfall in small business financing. To put into perspective, up to 99.9% of enterprises are MSMEs contributing to 35% to 69% of each country's gross domestic product (GDP) In Thailand specifically, there are over 3 million MSME organizations, which account for 99.5% of all enterprises and contribute 35% of the total GDP."

Co-founder and Group CEO of Funding Societies, Kelvin Teo, said, "The continued support from a global bank such as HSBC is a testament to its commitment to support the development of digital platform businesses such as ours and MSMEs as we ride through a two-decade high interest rates impacting the global economy. This enables us to further explore scalable debt financing for growth and profitability, and bolster financial inclusion for the underbanked and underserved SMEs in the region. "

As part of its ASEAN Growth Fund strategy, this transaction underlines a scalable solution to allow and enable digital lenders like Funding Societies to raise additional equity capital and debt financing through different channels. Furthermore, HSBC will act as the structuring bank, lender, account bank, FX counterparty, facility and security agent in providing a scalable and pan-regional financing solution to support Funding Societies' business expansion in the region.

Kelvin added, "There is a significant opportunity to serve the financing needs for underserved SMEs in Thailand. Funding Societies is committed to enhancing our operations in the country, with a goal of achieving over 30% growth in our lending portfolio over the next 12 months."

Harish Venkatesan, Head of Corporates and Business Banking, HSBC Singapore, said, "As an early-starter and a leading MSME digital financing player in ASEAN, we are pleased to provide our third credit facility for Funding Societies, cumulatively in excess of US$100 million (over THB 3.4 billion). This will enable us to continue supporting its efforts to provide financing support to micro, small and medium enterprises which will contribute to the building blocks of societies in the ASEAN region. We look forward to continuing support for Funding Societies as they grow their business and for the underlying MSMEs in the region through the HSBC ASEAN Growth Fund."

The US$1 billion HSBC ASEAN Growth Fund was launched in March 2024 to enable Singapore-based digital platform businesses supporting e-commerce in the region to achieve economies of scale across multiple international markets, grow their asset portfolios, and advance along the corporate lifecycle. Together with the New Economy and Venture Debt Fund, HSBC Singapore offers a comprehensive suite of financing solutions for new economy businesses across different stages of growth.

This announcement comes at the heels of Funding Societies' most recent strategic investments from Maybank in September.

Since its inception in 2015, Funding Societies has disbursed over THB 140 billion (US$4 billion) in business financing, positively impacting more than 100,000 businesses across Thailand, Singapore, Indonesia, Malaysia, and Vietnam, as well as processed an annualised THB 48.8 billion (US$1.4 billion) in payments GTV (gross transaction value) since its entry into payments in late 2022.

*In Thailand, Funding Societies operates through two distinct entities. The first, known as FS Siam Co., Ltd., holds a crowdfunding license from the Securities and Exchange Commission. Meanwhile, the second entity, FS Capital Co., Ltd., specializes in direct lending to small businesses.