Recently, Funding Societies Malaysia has recategorized the notes on its platform. Previously, there were only Invoice Financing and Business Term Financing. Now, there are three types of notes (five types to be exact). Let’s go through them one by one.
Business Term Financing
This type of financing is used to fund the note issuers’ day to day business operations. It allows the issuers to break down repayments into monthly instalments (principal plus interest). The duration of notes ranges from one to 24 months, with an average of six to 12 months. The product code for this category is MBBT. The service fee is 2% per annum.
Accounts Receivable Financing
This category was previously known as Invoice Financing. The issuers sell their future receivables or invoices to get immediate cash. This category is further divided into Non-Notified (MBIF) and Notified (MBTF). The difference is whether the note issuer’s debtor is notified or not. The duration of notes is between 15 to 120 days. The total amount is repaid in a lump sum at the end of the tenure. The service fee stands at 15% on the interest earned.
Accounts Payable Financing
This type of financing is used to fund the transaction(s) of the issuer. It is also subdivided into 2 categories: Purchase Order Financing (MBAP) and Dealer Financing (MBDF). The tenure and repayment are the same as Accounts Receivable Financing above. Nonetheless, the service fee is up to 30% on interest earned. Generally, the service fee of MBAP is 15% on interest while it is 30% on interest for MBDF.
MBDF is a new addition on the platform. Identified used car dealers use the loan to purchase used motor vehicles. The loan amount can be up to 70% of the vehicle’s value. MBDF is a collateralized P2P financing investment, backed by additional security such as ownership claim on the financed vehicles. The tenure is usually 90 days with a gross return of 12% per annum (net return of 8.4% after service fee). According to its June 2019 record, the default rate is 0% for this type of notes.
Grace period and early/late interest charges
There is a 7-day grace period from the due date for the issuer to make repayment without late interest penalty. Once exceeded, a charge of 0.1% per day will kick in and apply to the due amount (principal and interest). In the event of early repayment, an early repayment charge of 2% on the amount repaid will be levied. The platform will split this charge evenly with the investors.
Service fee
The service fee varies based on the type of financing. It is only deducted when repayment is paid. Furthermore, it is prorated according to tenure of note. For example, if the service fee is 2% per annum for a 6-month note, the total fee is 1% of total repayment. This service fee is tax-free.
Conclusion
As I am focusing on one P2P lending platform now, will Funding Societies Malaysia provide enough investment opportunities? The platform has an average of 15 – 20 notes per week, so I think the opportunities are pretty sufficient. The only problem now is choosing which note to invest in.
Referral link
Below is the referral link to Funding Societies. By clicking on this link, I may gain referral rewards from your registration with the platform. If you think I have done a good service in explaining the topic, please click on the link below if you have interest to register. Otherwise, you can always search Funding Societies Malaysia with Google and register yourself.
Funding Societies Malaysia: Link here – If you register and invest through this link, both of us will get RM 30*.
*Terms and conditions apply.