SME digital financier Funding Societies has partnered with the fintech arm of Credit Guarantee Corporation Malaysia, CGC Digital, to provide digital credit guarantee through a Shariah compliant digital supply chain financing solution to better serve Malaysian micro and small businesses.
Sealing their partnership via an MoU, both parties agreed to collaborate on a proof of concept project and develop products to widen financing access for underserved and unserved MSMEs.
“Following our entry into the SME Portfolio guarantee program of CGC in April this year, we are fortifying this collaboration with CGC Digital,” shared Wong Kah Meng, the group chief operating officer of Funding Societies | Modalku. “The digital-first approach leverages alternative data, enabling MSMEs with broader and more affordable access of MSMEs to digital guarantee and transformative financing.”
According to Wong, CGC Digital’s innovation of CGC’s credit guarantee would mitigate risk for investors and reduce cost of financing for MSMEs.
“Combining it with our industry playbook for fast-moving consumer goods, agriculture, telecommunications, and wholesale & retail trade segments, we would be able to serve more micro and small enterprises that make up these industry segments,” he said.
Through the collaboration, CGC Digital developed a new digital credit guarantee product for CGC. The new instrument will be offered for financing up to RM4 million (US$880,320) as a start, to up to 100 creditworthy micro and small enterprises via Funding Societies’s digital supply chain finance solutions, using alternative data to assess credit risks of MSMEs.
Funding Societies has been aggressively building its Shariah product suite. In June, it launched Islamic investment notes, just weeks after introducing a range of new Shariah compliant microfinance and business finance solutions.
This is in line with the start-up’s target of increasing its Islamic disbursement to at least half of its financing portfolio by 2025.