As an SME, seeking business loans from banks can be quite the hassle, but there is an easier and cheaper way with, Peer-To-Peer Financing, or P2P Funding. While you still need to draw up your business plans and provide business and financial statements to be evaluated, we have 7 tips on how to get that money you want as a borrower through P2P Financing.See also: Understanding Peer-To-Peer Lending in Malaysia
In Malaysia, the Securities Commission (SC) is the regulatory body for P2P funding activities via its P2P regulatory framework and there are a few platforms that you could seek funds from. Working with each P2P funding platform is different but we like Fundaztic. They even have a free-to-use funding rate calculator tool and simple to understand video instructions to become an issuer.
Check out the benefits of becoming an issuer on Fundaztic.
So, the idea is that there are many people out there with money to invest, and they’re looking for new investment platforms. P2P funding is this new alternative investment vehicle, where investors can now crowdfund into the debt financing of an SME. It’s important to understand that you must present your business profile to these investors in the best possible way. Adhere to these tips and you could be well on your way to getting the funds you need.
1. Present your business in the best possible way
Treat your company profile as if you are applying for a job. When applying for a job your resume needs to show your strengths, same principle applies here. The P2P investor often decides within a couple of seconds whether or not your portfolio is interesting.
2. Think like an investor
The first and most important thing for an investor is to know if he can trust you to pay according to the agreed interest rate for the time period that is stated. The more you’re are able to convince the lender that you are indeed a credible borrower, the higher your chance will become to get that money. If your company has community or social goals, state those reasons to win over investors that believe in corporate responsibility.
3. Tell the truth
Fundaztic encourages their issuers to disclose correct information required to create transparency and raise awareness with prospective investors. If you have lied, and when word spreads that you have mislead your investors, there won’t be any more investments made into your portfolio. It’s an extremely costly mistake.
4. Check for mistakes
There is no bigger turn off for a possible funder than incomplete information on your fundraising application. Your application could even be skipped if your profile has mistakes in it. Make sure to double check your portfolio before trying to win over the evaluators and investors. Don’t let them think you are a scammer.
5. Describe as much as possible
Be objective and goal driven on the purpose for which you need the money. P2P funding is NOT to pay off debts or to have a ‘clean start’. You shouldn’t leave any possible doubt in the investor’s mind on where their money is going to and for what purpose it will be used. Fill in the application as complete as possible and be clear with the target and goals you want your business to achieve.
6. Don’t make them feel like you’re desperate
The more desperation for money the investors sense the less likely they are willing to invest and lend you the money you need. You must show confidence in your writing. Let someone else review your fundraising application. Emphasize that you will use the money to reach your goal and that you will pay back their investment.
Fundaztic conducts checks and evaluates your Probability of Default. If you have a higher probability, don’t be expecting people to start investing big amounts of money in your business. Also, adjust your expectations during the funding application process, the requested funding amount may be adjusted according to various factors.
Lastly, you should always honour the contract, it is your responsibility to make prompt payments. You are expected to repay to the investors the funding principal amount and interest, according to a pre-agreed repayment schedule and interest rate. Your monthly repayment status and records is reported to all the major Credit Reporting Agencies in Malaysia.