Recently, New Union shared with us the perspective from SMEs. SMEs are often stuck in a chicken and egg problem. They need credit to grow, but banks are often unwilling to lend to SMEs without track records. So how can SMEs achieve track records when banks are unwilling to lend in the first place? How can SMEs get their first breaks? Crowdfunding, if done properly, is a good solution which benefits SMEs, investors and the society.
Below is the story (provided by New Union) of how Mezzo Interior becomes a bankable company through crowdfunding.
Crowdfunding in Singapore supports the SME industry by providing more forms of financing to address their needs. New Union, one of Singapore’s largest debt-based crowdfunding platforms, follows this path by supporting SME growth efforts by provision of crowdfunding loans.
Local homegrown interior design SME, Mezzo Interiors Pte Ltd (Mezzo), is one such beneficiary from debt-based crowdfunding. In June 2015, Mezzo was reported to have obtained a crowdfunding loan from New Union in a sum of S$ 660,000 to support their growing efforts. Today, Mezzo has successfully arranged an over S$ 2 million banking facility with a competitive single digit interest rate that allows them to grow the business to greater heights.
New Union’s co-founder Mr Eddie Lee said, “SMEs face a myriad of options when it comes to financing and New Union understands that younger enterprises usually have more difficulty seeking working capital as they may not have the track record to seek financing from traditional lenders, such as banks. We are pleased that Mezzo has grown to become a bankable SME and glad that we were able to support them during their early growth stage to prove their mettle.”
Crowdfunding loans usually offer interest rates that are at least 10 percent annualised, Mezzo’s effort in obtaining more competitive bank financing signifies the banking and traditional financing industry’s comfort and acceptance of Mezzo as a proven SME who could make good on their loan repayments.
Mezzo was incorporated in early 2013, the company is considered young today at 3 years of age. Without a proven track record, it would be difficult to gain access to bank financing. New Union is pleased to be able to assist Mezzo in building up a proven record of capability for further financing opportunities. Today, Mezzo has expanded from local commercial interior design assignment to overseas hospitality and residential main contractor projects.
Mezzo founder Mr Lee Yue Cheng states that: “In today’s business climate, SMEs face multiple challenges such as tight labour issues, limited access to financing, rising costs and increasing competition. SMEs need to be productive and grow quickly in order to remain competitive in their field. These challenges are not easy to overcome when you are a young company. We are lucky to be able to secure crowdfunding to help us grow our business in the early days.”
According to DP Information Group’s SME development Survey 2016, released on 2 Nov 2016, 22% of the 2,513 local SME respondents said they faced financing issues, up from 14 percent last year. They cite higher bank interest rates and tighter access to supplier credit as the main challenges, which will result in a significant impact on the cash flow of SMEs.
Mr Eddie Lee also said that it is imperative for New Union to continue to serve SMEs who are building competitiveness in the market. “New Union believes that it is important to identify qualified SMEs who need working capital to maximise their capability and groom their profile. Through crowdfunding, we can build a win-win situation for SMEs and our platform investors.”
Profile of Mezzo Interiors Pte Ltd
Mezzo Interiors Pte Ltd was founded by Mr Lee Yue Cheng in January 2013 and specialises in interior design, furnishings, alteration, addition and rebuild works. Their project portfolio ranges from commercial buildings, retail malls to office environments and can provide expertise in civil, structural, electrical, mechanical, plumbing and sanitary assignments.
Profile of New Union (Singapore) Investment Pte Ltd
Launched in February 2014 with the aim of connecting local SMEs seeking short-term financing with individuals and businesses interested in making short-term investments, New Union is a debt-based crowdfunding platform founded in Singapore, having funded a total of S$ 1.3 billion across Asia, to SMEs till date. New Union, apart from Singapore, currently has offices in Guangzhou in China, Taipei in Taiwan and Phnom Penh in Cambodia.