Hope. 

We are going through an extremely tough time due to the spread of COVID-19 and HOPE is all we have to keep on moving. As an SME owner, you are gripped with panic, fear, and doubt; anticipating the worst for your business. Over the past few weeks, article headlines continue to instill fear among us about the ultimate repercussions in the aftermath of COVID-19.

Bursa Malaysia continues to slide to 11-year low – by The Star, 20th March 2020

Crude surplus sends oil plummeting to a 17-year low – by FMT news, 30th March 2020

Many small retailers expected to close shop soon – by The Star, 31st March 2020

To know more about our economic status, read COVID-19 Outbreak: Is the Malaysian Economy in Trouble?

Aids and Assistance to Help SMEs to Survive

All SMEs are more or less going through a shortage of cash due to the implementation of the Movement Control Order (MCO). People’s movements are restricted, shops and offices are shut down, eventually impacting businesses of all nature. The following aids and assistance are a way to restore hope in SMEs to fight through this difficult time.

First Economic Stimulus Package

The Government is working very hard to help SMEs to sustain in the market. During the early onset of COVID-19 outbreak in Malaysia, the Government has initiated to cap your business losses by introducing an Economic Stimulus Package 2020 on 27th February 2020. 

The Package intends to aid affected businesses such as tourism-related businesses, hotels, airlines, tour companies, manufacturing, and even construction. The Government hopes to regain financial stability through this Package to sustain this volatile economy. 

Moratorium on Loan Repayments

To further instill hope and promote confidence among the business owners and homeowners, Bank Negara Malaysia (BNM) has offered a 6-month breather of bank loans to both businesses and individuals. Now, you can defer your business loans and your home loans for 6 months beginning from 1 April 2020. This will help you to focus on more important expenses to survive through the volatile market. However, the catch is, if you decide to defer your loan, simple interest will be added to your outstanding loan during the deferred period. So, in the end, you will be paying more than you were initially anticipating which will eventually add to your overall cost.

Second Economic Stimulus Package

On 27th March 2020, RM 250 Billion worth PRIHATIN Economic Stimulus Package was announced by the Prime Minister of Malaysia, Tan Sri Muhyiddin Yassin. It is an effort to continue stabilizing both the household and financial infrastructure of the country. 

The Government has allocated a fund of RM 4.5 Billion to SMEs and micro-entrepreneurs who are struggling to survive during this turbulent economy. The Government has also deferred the income tax for businesses by 3 months, starting from 1st April 2020.

Know more about the Benefits of the PRIHATIN Economic Stimulus Package for business industries here.

Special Package for SMEs

Just 10 days after the PRIHATIN Economic Stimulus Package, our Prime Minister, Tan Sri Muhyiddin Yassin announced this special package on 6th April 2020. The Package will specifically help those SMEs who have experienced extreme losses due to the MCO implemented by the Government. 

The RM 10 Billion Special Package includes wage subsidies, financing assistance, moratorium and discount on office rentals to help your business recover from the sharp impact of COVID-19.

Know more about the Special Package for SMEs here.

Is the Help Enough for All Businesses to Survive?

Probably not! And the possible reason may surprise you. According to the SMEinfo Portal (a centralized online information repository on SMEs), there is an estimate of 907,065 registered SMEs in Malaysia. The Government cannot provide sufficient financial assistance to help all the businesses to sustain in the market even with the latest announcements of initiatives. 

SME Association of Malaysia (SME Malaysia) has recently conducted a survey on the current financial situation of SMEs. It was a shock to find out that the Government assistance through the Stimulus Packages can only help about 26.3% of SMEs to sustain their business despite the additional disbursement of RM 100 Billion of financing to SMEs under the PRIHATIN Economic Stimulus Package. The remaining 73.7% of SMEs have yet to apply for any special relief funds or alternative financing to sustain in the market. Hence, we need to support each other to survive this dark time. 

The secret to survival is to maintain a healthy cash flow for your business. With banks easing up the financing process, you might be hoping that you can manage funds to recover your business during this period. 

But, it is FAR from easy. Let us find out why!

Roadblock for SMEs to Raise Funds

You are in pursuit of survival to pass though this bad phase of the pandemic. Maybe you are hoping to survive this critical time by taking financing from banks. Unfortunately, it is not that easy. Tourism, airlines, and retailers of non-essential goods are currently considered as high-risk businesses by the banks as they are the most impacted by COVID-19. Thus, banks are restricting financing to these companies as they are considered to have a higher chance of defaults on their loan repayments.

On top of that, most commercial banks are disbursing the Economic Stimulus Package to their existing clients only. This is restricting resources for SMEs who do not have any existing financing records with their banks. This has put your business in a very tight position. It seems like there are ample resources to raise funds for your business, but when you look closely, the chances seem to get thinner with every step. 

Then again, getting funds approved by the banks is never easy. You need to provide a long list of documents, pledge certain collaterals such as physical assets or even cash while enduring a long waiting period to acquire your fund. Unfortunately, time is not a luxury that you have right now. You need a quick and easy way of financing to keep your business moving. In such a scenario, you might consider alternative financing to get out of this tough spot.

How CapBay can be your SOLUTION!

Right now, you are probably experiencing a sharp drop in sales and longer payment terms from clients. Moreover, all your cash flow is slowly draining as you have to pay for your usual expenses such as rent, staff salaries, and other overhead costs.

In such instances, even if you get new orders, you may not have the fund to complete it right away. This is where CapBay comes in to help you. CapBay is a Supply Chain Financing (SCF) company that offers Invoice Financing Facility to businesses. We understand that you are going through a critical phase but with our easy and quick financing solution, we can help you to survive in your time of need.

Say, when you invoice a client after completing an order, rather than waiting for a long payment term to get your money, you can simply come to us. We offer 80% instant cash based on your invoice. Plus, our services do not have any setup costs or hidden costs to pile up on your expenses.

This extra fund will fulfill your need for emergency cash. You will literally leverage your sales invoice to get money. This will not only shorten your payment term from customers but will give you enough cash to sustain the volatile market. 

So, don’t lose hope. Survive this time of uncertainties by making Smart Financing Choice. We are just a click away. Our consultants are here to help you if you have any questions.

Peer-to-Peer (P2P) investing is a method of alternative financing that matches businesses directly to investors to obtain finance. P2P investing does not require a middleman such as a financial institution to work as an intermediary. It’s a two-way street where the businesses have the opportunity to raise funds for their company and you, as an investor, get to provide financing to local businesses while gaining attractive returns. 

The CapBay P2P financing platform adopts a transparent policy, boasting attractive net returns from a pool of available investment notes at your disposal. We have made the process of P2P financing easier with customer-friendly approaches, and a seamless approach to investing. Now, you can invest your savings in a trusted platform to earn attractive returns.

Before we tell you more about our P2P platform, let’s learn about how it works.

How Does our P2P Platform Work?

CapBay P2P works great for businesses that need funding and for individuals who are looking for creditworthy alternative investments for their savings. We match both of their needs, turning separate challenges into a win-win opportunity. 

For instance, if an SME requires more capital to run its operation, it can request for financing from the CapBay P2P financing platform. We will then undertake a rigorous assessment to ensure that the SME Issuer (applicant) has a sound financial capacity to repay the financing in due time, assigning them a risk grading in the process. 

Once the SME Issuer’s application is approved, the required financing is crowdfunded from the investors via the CapBay P2P financing platform. We will facilitate the whole crowdfunding process, ensuring that the entire process is seamless. The savings you invest in the platform will be kept in a trust account, to which we won’t have any access to. We will then collect all the invested funds from the crowdfunding exercise and disburse the aggregated amount to the SME Issuer once the target has been met.

Once your investment matures, your principal and returns will be credited back into your CapBay P2P account. The end result is, the business will have its required financing in its time of need, while you earn an attractive return on a short tenure investment in a simple and effective way.

In P2P financing, it is advisable to split your investment into a variety of notes to invest into different businesses. Diversifying your investment across multiple businesses will reduce the impact of defaults on your portfolio.

CapBay P2P will guide you through your entire investment journey and notify you on every investment note so that you can track the progress of your investment at any given time. Whenever a new note is issued, an email will be sent to you to ensure that you are up to date on all the investment offers available.

We aim to make a difference by creating a platform that encourages transparency. Investing with peace of mind and clarity is what we offer to our investors.

So, how do you invest in CapBay P2P Financing platform?

Just follow these 7 simple steps to be a part of the P2P Investing journey.

 7 Easy Steps to Invest in our P2P Platform

1. Get your documents ready before you sign up

• Scanned copy of your Identification Card (IC) (front and back) 
• Mobile number for One-time PIN (OTP) verification
• Details of your bank account
• Bank statement copy

2. Register on the CapBay P2P Financing Platform

• Download the CapBay P2P Invest app on the App Store or Google Play Store or go to http://invest.capbay.com/
• Complete your basic details to create your account
  • Full Name (as per Identification Card / Passport)
  • Email and Mobile verification
  • Password details
  • Banking information
  • Wealth declaration

3. Make an Initial Deposit of at least RM 10,000

You can get started by investing with a minimum portfolio of at least RM 10,000. However, we suggest that you build up your investments to RM 50,000 in order to ensure that you are sufficiently well diversified, allowing us to allocate your funds into a diverse range of investment notes.

To make a deposit, transfer the money from your bank account to our P2P account via bank transfer, internet banking or cheque. As of this time, we do not allow any cash deposits into our platform.

Next, submit a deposit request through the CapBay P2P platform, including the payment receipt as proof of your payment. Once you make the submission, we will approve your deposit within 3 working days.

4. Set up your Auto-Invest Target function

We are the first in the market to introduce Auto Invest functionality to simplify your investment journey. Our Auto Invest function will automatically diversify your investment across various notes within our investment platform.

In the Auto Invest page, you will be able to select your Auto Invest profile that will allocate your portfolio into our programmes. These profiles have allocation – that correspond directly to your risk preferences, allowing you to tailor your investment according to your personal needs. 

Once selected, the  Auto Invest function will allocate your funds with varying limits between our programmes, such as:

• CapBay Select – A carefully curated set of low-risk investment notes with moderate net returns of up to 8% p.a.
• CapBay Diversified – Full range of investment notes with moderate risks and higher net returns of up to 10% p.a.
• CapBay Assure – Our safest notes, delivering net returns of up to 6% p.a. with principal and interest guaranteed via a reserve fund

5. Start Investing

Once you have made your initial deposit and selected an Auto Invest profile, every time a new note is launched, an email notification will be sent to you. You can view the note on the platform by navigating to the New Opportunities page under the Invest Now tab.

• Find out more information about the note by downloading the investment memo 
• Choose to opt-in or opt-out of a note before it launches
• After the investment note launches, your funds will automatically be invested in it, based on our allocation policies
• You can also manually top up your investment on a note up to its funding limit after the Auto Invest allocations for the note has been performed

6. Earn Your Return Once the Investment Matures

• Once the note reaches its maturity, you will earn attractive net returns of up to 10% p.a. (depending on the programme and investment note you choose) on top of your principal. This amount will be credited back to your CapBay P2P account.
• If you wish to withdraw your returns, turn off your Auto Invest by unselecting the profiles once your investment matures. This will ensure that your funds will not be automatically reinvested, and are ready for withdrawal.
• If you do not cash out your investment after it matures, it will automatically be reinvested to provide compounding interest on your investments.

7. Monitor Your Portfolio

Now that you know how to invest, get familiar with the following tabs to keep track of your investment:

• Invest Now Tab – Overview of your cash balance, annual return and loss rate
• Performance Tab – Provides details on how your returns have been calculated
• Portfolio Tab – Gives an overview of the status of your notes

What are the Benefits of Investing with the CapBay P2P?

• Accessible by web platform and mobile app from anywhere, at any time
• Short investment tenure of 1 to 6 months
• Safer alternative investment platform with a 0% default rate 
• Personalised service with Relationship Managers providing investor support
• One of the Firsts-in-market Auto Invest programmes 
• Transparent returns with detailed breakdowns of net returns provided upfront to ensure that there are no hidden fees

Conclusion

The CapBay P2P financing platform takes away the complexity of investing. You can invest via your mobile device or browser from the comfort of your home, based on your preference, with customer-centric features that ensure ease of use. Reach out to us if you have any queries. In the meantime, we will continue to post more about our platform on our blogs and social network, so keep connected to learn more exciting stuff about our P2P platform.

A pandemic occurs when there is an outbreak of a disease affecting a large number of people over a specific period of time. This fast-spreading disease crosses borders and countries, turning into a global crisis. The last time we have seen something like this was during the outbreak of Severe Acute Respiratory Syndrome (SARS) in 2002-2003. After more than a decade, we are experiencing a Pandemic outbreak once again called the Novel Coronavirus Disease (COVID-19).

The novel coronavirus originated from the wild animal market of Wuhan Province in China. On 31st December 2019, China officially reported to the World Health Organization (WHO) about the existence of the virus. The virus, with flu-like symptoms, has spread fast across nations and continents as the outbreak was during the holiday seasons. 

As of 12th March 2020, 125,518 COVID-19 cases have been reported worldwide, with 158 people infected in Malaysia. The bright side is, if we take sufficient precautions, we have less chance of being infected by COVID-19. However, we cannot say the same for the current state of our economy.

Every time a Pandemic hits, our economy suffers. Businesses incur losses as people start taking precautionary measures such as refraining from traveling or going outdoors. Not only that, but people also hold off events, celebrations, and large expenditures like buying a car or a house. This is because both consumers and businesses want to minimize travels or contact with large crowds. So, how is COVID-19 impacting our businesses and the economy? Let’s find out!

Impact on Gross Domestic Product (GDP)

Gross Domestic Product (GDP) is the monetary value of all finished goods and services produced within the country during a specific period of time. It provides an economic snapshot of a country to estimate the size of our economic growth and value.

Malaysia’s economy was already enduring a lower GDP growth as a result of the Trade War between China and the United States since last year. Now with COVID-19, the economy threatens to become more volatile resulting in financial turmoil. The Malaysian Government previously predicted a GDP growth of 4.8% for the year 2020. Now, the Government predicts that the GDP will be lower due to the Covid-19 outbreak. It is estimated to be around 3.2%-4.2% only.

Impact on Business Industries

When we look into the business landscape, the Pandemic outbreak impacted several industries. However, the largest hit is taken by the tourism sector. 11.8% of our GDP comes from tourism. With COVID-19 at loose, the Visit Malaysia 2020 (VMY2020) campaign is at risk. The campaign is estimated to attract 30 million tourists out of which 10.6% is targeted to come from China. Depending on the current situation, this target will not be easy to achieve.

Previously during the outbreak of SARS, tourists’ arrival from China dropped by an alarming 37%. The overall tourists’ arrival dropped by 21%. We are yet to know how COVID-19 will impact our tourists’ flow at this time. Airlines, hotels and tour operators are seeing a significant drop in business since these industries are very much dependent on tourism.

The manufacturing industry is also impacted by the virus outbreak as China has already shut down many factories. These factories usually provide supplies to Malaysian manufacturers but now they are unable to do so. As a result, the manufacturing sector has a shortage of supply and are unable to manufacture their products on time. Other industries such as the commodity sector, supply chain, domestic exports, retail and service sectors are also impacted by the COVID-19 outbreak as China is the largest trading partner of Malaysia. 

However, there are some industries which are benefitting from this global health crisis. COVID-19 has indeed put a monumental emphasis on hygiene. Gloves, masks, sanitizers, paper towels, and other hygienic products are on high demand in the market right now. 

Malaysia is the main producer of medical gloves with approximately 180 billion pieces exported worldwide. When the news of COVID-19 became public, the demand for gloves from companies like Top Glove has escalated up to 14%  in volume. Economists also expect a greater demand in Malaysia’s healthcare sector. Pandemic such as this helps in raising health awareness resulting in people making an extra effort to attend to their health. 

Impact on Banking and Financial Services

In the world of Finance and Banking, S & P Global Ratings anticipates that Non-Performing Loan (NPL) will increase from 1.5% (as of 31st December 2019) to 1.7-1.8% as many businesses are dealing with economic instability due to COVID-19. Their sales growth will decline. As a result, they will not have sufficient funds to pay their loan installments.

Measures Taken to Restore Financial Stability

Introduction of Stimulus Package

The Government recently launched a RM 20 billion Economic Stimulus Package on 27th February 2020 to assist the businesses affected by COVID-19. The Government will unfold the package with 3 strategies to restore financial stability. It will run for a period of 6 months starting from April 2020. 

Source: The Edge, 12th March 2020

The Stimulus package will primarily focus on tourism and tourism-dependent retail businesses, hotels, airlines, transportations, and tour companies. It will also provide aid to other affected industries bearing losses such as manufacturing and construction sectors. The Government hopes that this financial aid can help to sustain and catalyze business growth whilst encouraging quality investments through this measure. 

Overnight Policy Rate (OPR) Cut

Now, market and consumer sentiment are low due to the COVID-19 outbreak. To boost consumer’s purchasing power, Bank Negara Malaysia (BNM) has recently cut the OPR for the second time this year on 3rd March 2020. This time, BNM reduced the OPR by 25 bases to 2.5%. 

The decrease in OPR will impact both financing and investment rates. A decrease in OPR means businesses will now be able to obtain financing at a lower interest rate. However, the interest rates on savings and investment will also decline. To get better returns and to diversify the existing investments, businesses can opt for alternative investments such as Peer-to-Peer (P2P) Investment. This will give them the opportunity to earn a higher return, especially in the current volatile market.

Banks Deferring Loan Payment

Banks are anticipating that the COVID-19 outbreak will make the market more volatile. The S&P report also indicates an increase in NPL ratio as mentioned above. So, many banks such as Bank Simpanan Nasional (BSN), RHB and Maybank announced temporary deferment to repay the loans for those who are affected by the Pandemic. They are hoping that the deferral will give their consumers enough time to recover from the financial crunch and repay their loans again.

This is a difficult time for industries to sustain in the market. The turbulent market is a challenge for many businesses to raise funds to cover their expenses. The Government and banks are doing their best to aid the businesses, but industry players must also look into more versatile resources to cater to their funding. 

At CapBay, we aim to contribute to SMEs’ growth by providing supply chain financing to companies. If you are looking for a super easy and instant way of getting funds, you can get in touch with us. We are here to help your financing needs at every step of the way!

As a business owner, you are making important decisions in your business, every day. Many of those decisions depend on your capacity to raise funds. Here’s when financing comes to play. Striking a balance between equity and financing, you have to know when you need short term financing and when you need long term financing.

In our previous article, we have revealed the Most Common Reasons Why Malaysian SMEs Seek Business Financing. The article also discloses the Top 3 Short Term Financing available to fund your business. However, short term financing cannot solve all financing needs. 

Let’s look at 8 distinct scenarios when short term finance is the answer!

1. Urgent Need for “Quick Cash”

Unexpected expenses are a part of running a business. You may need the cash to fund an unfinished project or to pay for sudden legal expenses. To get quick cash funding, you can apply for short term financing until such emergency surpasses.

You have two choices; you can apply for bank financing which may take a few weeks to over a month depending on how quickly you arrange the documents and collateral to apply for the financing. Or you can opt for alternative financing. You only have to provide a few documents supporting the proof of your business ownership, your cash flow status and your credit score to make the application, which can be approved as fast as 3 days.

2. Having Difficulty in Cash Flow Management

According to SME Corp Malaysia, 35.9% of Malaysian SMEs face cash flow problems and the most common problem is delayed payments from their clients. If your business sells on credit, you need to wait for an average payment period of 90 days and even up to 120 days to receive your payment from the clients. During this waiting period, your business often runs short of liquid cash to sustain daily business expenses and attend to new clients. Short term financing such as invoice financing can help you to finance your business needs during this temporary period.

To further enhance your cash flow, read 12 Ways to Improve Your Cash Flow Cycle in 2020

3. If You are a Young Business, Operating for Less than 1 Year

When you are a young business, your investment is more than your earnings. While you are chasing for more clients, a small infusion of cash can help your business to continue operating. Besides, you need extra funds to cater to your start-up costs like paying the deposit for your office space and fulfilling market demand. Short term financing can help you to get this extra cash boost until your business is ready to run in full force.

4. Need to Purchase Equipment or Inventory

As your business grows, your equipment becomes older. Sometimes, the equipment starts malfunctioning or becomes outdated and you need to buy a new one to replace it. And, if your business is growing, you must need more inventory to attend to your increased pool of clientele. Use short term financing to fund these needs efficiently.

5. Cash Shortage during Holiday Seasons

Holiday seasons are an excellent time to maximize your sales. People’s mood is elevated, and their pockets are full. However, you need to gear up for the festive seasons. You need more inventory and additional staff to serve the large volume of clients. You may also need to spend on advertisements to promote your exclusive deals designed for the festivals. All these preparations need money. To help you get the influx of cash to prepare for the holiday seasons, short term financing is the best solution.

To know more about how to optimize your cash flow in festive seasons, read 5 Ways to Optimize Your Cash Flow for Chinese New Year

6. Taking on More Clients

Getting more clients is always good news but what happens when you don’t have enough capital to serve them? An easy way to squeeze out of such a situation is to take short term financing. You will get the fund to attain more clients. More clients mean more money and a step forward in expanding your business.

7. Planning for Business Expansion

If you are thinking of a business expansion, short term financing can provide you the extra funding that you need to finance temporary expenses to help you grow and expand.

8. Planning to Hire More Staff

When your business starts to grow, you may need to hire more staff to manage it. So, you have to invest in your internal Human Resource (HR) department or hire an external recruitment agency to seek the right candidate for your company. Upon hiring, you have to invest in each staff’s salary, bonus, and monthly performance incentive. You can opt for short term financing to raise the extra fund needed for the initial cost of this hiring process.

9. Need to Build Your Credit History

If you are a small company, you need to have some strong credit history to apply to traditional banks for bigger financing. To get started, initiate with short term financing from alternative lenders and maintain a good track record of payments. It will help you in the future to negotiate better interest and financing terms when you apply for long term financing from banks.

To summarize, use short term financing to serve your temporary capital needs. Always align the duration of capital deficiency with the duration of financing to ensure that your need is only temporary. Short term financing gives you the extra boost you need to enhance and expand your business.

Chinese New Year is just around the corner. Is your business ready to celebrate the joys of the new year? With the Chinese New Year holiday closing in, the pressure of overflowing customers is evident. While you struggle not to be overwhelmed, there’s also a queue of suppliers, employees and other service providers who push you to settle their payments before the big day arrives.

On the other hand, the business itself has its extra cost during Chinese New Year celebrations:

• Extra promotional cost to bring in customers for the festive sales
• Pay the staffs overtime for longer hours
• Cover for the additional supplies you need during this time

So, it is obvious to assume that your business is spread thin on cash flow during this period. You need to prepare before the festival is upon you to enjoy its perks. Keep reading to know-how!

1. Forecast Your Cash Flow

Run a quick check on your cash flow ins and outs. See the trail of sales and expenses for Chinese New Year in the last few years to get an estimate of the cash outflow you will experience during the Chinese New Year this time.

2. Manage the High Volume of Customers

You are sure to get an overflow of customers during the Chinese New Year time. Appoint friendly staff to offer fast and efficient services to customers. Be cautious of the orders to avoid any mishaps or delays in services. More happy customers mean more cash inflow!

3.  Take Precautions against Delayed Payments from Debtors

To overcome the extra cost of catering to Chinese New Year customers, you need money! So, if your debtors do not pay you on time, you may be dangerously low on cash. Hence, keep a record of the debtors’ due time for payment, which falls under the Chinese New Year season. Request them for payment before the Chinese New Year.

 4.  Invoice Financing

It is common for debtors to pay you later than usual during the Chinese New Year season. This leaves you with tight cash flow to fulfill your orders during this time. Invoice financing allows you to turn your receivables into quick cash giving you the cash resources to take additional orders. After you complete an order and invoice the client, you can use the invoice to get upfront cash as high as 80% under CapitalBay’s Invoice Financing program in exchange for the invoice. This will allow you to meet your spike in orders.

5.  Monitor Inventories

During Chinese New Year, some items sell more than others. For example, if you own a bakery, your moon cakes may be selling more than your other assortments of pastries during this festive season. Hence, make sure you have enough supplies to cater to the increased demand. Keep regular counts of your inventory so that you don’t run out on your most saleable item. After all, more sale means more cash inflow!

Thinking of the Best Way to Optimize Your Cash Flow for Chinese New Year?  – Think CapitalBay!

We are an award-winning Supply Chain Financing (SCF) platform that offers invoice financing to companies under the best terms and rates as follows:

• Free registration
• No legal and stamp duty fees
• No collateral is required
• Approval is as fast as 3 days
• Cost of financing is as low as 0.8% per month
• Enjoy 80% of cash instantly from your invoices to the customers