CAPITALBAY, a multi-bank supply chain finance platform, has received the approval from the Securities Commission Malaysia (SC) to operate a peer-to-peer (P2P) financing platform.
The platform is one of five new P2P operators approved by the SC. The others are CapSphere Services, Crowd Sense, MicroLeap and MoneySave Capital.
CapitalBay specialises in short-term working capital financing, offering products such as invoice financing to SMEs across various industries. Its financing solutions enable business-to-business (B2B) suppliers to be paid earlier for their outstanding invoices by allowing them to sell their invoices for cash upfront.
As for B2B buyers, CapitalBay provides financing solutions such as deferring payment due date by paying their suppliers first.
Established in 2016, CapitalBay has been working with multiple banks in the region by enabling digital supply chain financing for their clients through CapitalBay’s platform.
With the P2P approval, retail investors are now able to access the platform and participate in these financing deals that were previously only available to banks and institutional funders.
Since starting operations in late 2017, CapitalBay has financed over 1,300 B2B transactions worth RM75mil.
“Cashflow is the lifeline for many businesses. Today, many small businesses struggle with cashflow and traditional lending models find it difficult to fulfil this gap. We believe that by shortening the cash conversion cycle for businesses, this unlocks cashflow for them to grow their business, which is the basis for setting up CapitalBay,” says co-founder Ang Xing Xian.
CapitalBay is a recipient of the development grant from Cradle Fund Sdn Bhd.,
“With the P2P approval, we would like to invite investors to join us in our mission to provide smart and inclusive financing to businesses across South-East Asia. This will enable businesses to grow and prosper, ultimately improving the livelihoods of the business owners, employees, and the community we all live in,” Ang adds.
CapitalBay adds that its investors can expect to earn double-digit annualised returns of up to 18%. Its business payment financing products have shorter tenures of about two months.
Ang says most of its financing deals are backed by invoices due from large credible institutions such as multinational companies, blue-chip companies and government-linked entities with lower default risks.
Traditionally, banks’ credit assessment processes are tailored for larger deal size, with emphasis on business financial statements and collateral. This results in a high rejection rate for SMEs who require smaller loan sizes and shorter financing tenures as it may not be commercially viable for banks.
CapitalBay leverages on leading technology to build a unique payment risk scoring model that predicts the risk of each transaction on its platform through machine learning. This opens up access to financing for the under-served SMEs.
Since its launch, CapitalBay’s data-driven approach has kept its default rate at 0%.