How P2P Financing in Malaysia is Within Easy Reach of Startups to Utilize Funding?
In Malaysia, P2P lending is becoming the norm for businesses to get much-needed finance to get an idea off the ground or to raise extra capital for further expansion. Especially, the startups can ideally count on peer-to-peer financing without finding the interference of a strict financial body and yet source funds anywhere in between RM 1,000 to RM 50,000 at a lower interest rate.
This easy source of finance for startups is rapidly becoming the mainstream to access funds online in a cheap, quick, and easy way.
So how P2P financing in Malaysia is an easy access point for small or medium-sized companies? To answer this question, we will be looking at the pros and cons of such a financial offer along with its comparison with traditional loans.
But before that let’s take a look at the meaning first.
What is Peer-to-Peer Financing in Malaysia?
It is a seamless way for startups to raise funds from several individual investors online without making several rounds to the traditional bank. Borrowers have to sign up on a P2P lending platform and place their required set of funds either to finance the starting of the business or to buy assets, expansion, or for acquisition. The final decision relies on the hands of individual investors who look to the request of borrowers and decide to provide the necessary funds.
How it is Different from Traditional Loans?
P2P financing is a specialized model of crowdfunding in Malaysia that works more like an equity-based model. It allows lenders to invest in a debt-based investment model with the presumption that borrowers will likely repay in small monthly installments along with the rate of interest.
On the other side, traditional banks are still conservative about who they will lend money to and at what rate of interest. They have more strict regulations and compliances with the least flexibility on the part of borrowers to apply for a small loan, apply online, and no room for negotiation.
Pros of P2P Financing
Streamlined Application Process: Online application process makes P2P financing a much-simplified loan option for startups. It allows direct interaction between individual lenders and borrowers. You can simply sign and up share your requirements of funding along with the purpose of the loan. Also, check interest rates directly on the platform and find complete transparency around.
Better Interest Rate: Under this financial offer for startups in Malaysia, lenders decide the interest rate they want to charge. And, borrowers have the flexibility to choose or refuse the loan to make an informed decision wisely. If we compare the traditional loan interest charges, then peer-to-peer financing is on a much lower scale deems fit for borrowers.
No Collateral Required: There is no such requirement on the part of startups to declare anything as security against the small business loan. Such platforms only require you to maintain feasible credit ratings to showcase your creditworthiness to individual lenders.
Cons of P2P Financing
Lack of communication between individual lenders and borrowers.
Small fundraising for businesses in Malaysia as compared to traditional loans.
If having bad credit scores, then it will be pairing up with a higher interest rate.
P2P financing is a viable alternative for small to medium-sized businesses in Malaysia to get quick access to funds without undergoing stringent terms and conditions. It is an excellent financial alternative as compared to traditional loans with having much flexibility, transparency, and affordability.
James is an experienced and skilled writer having expertise in the financial tech industry. He writes well on P2P lending, micro business loan in Malaysia, and other loan offers for large, medium, to small-sized businesses.