146 Investing in Funding Societies through PhillipCapital

146 Investing in Funding Societies through PhillipCapital

PhillipCapital has recently signed up with Funding Societies to carry its peer-to-peer financing products. This tie-up offers some exciting and interesting products.

When I shared the tie-up with investors, some of them are already existing investors with Funding Societies. So they see no difference going through PhillipCapital.

Direct investors in Funding Societies has two products to choose - Working Capital Financing and Invoice Financing. Working Capital Financing is for borrower to expand their business. Invoice Financing is for borrower to have liquidity while waiting for their buyer to pay. Direct investors can select the which type of financing to go for, rating quality of company and time frame of lending.

Working Capital Financing is consider higher risk because we cannot know what will turn out in a business expansion. Invoice financing is consider lower risk because the buyer has obligation to pay within a specific credit term.

I have shared I have two default investment in P2P financing. They are in the legal process to recover the money. So although the default rate is low, there is still default. This reminds me of an old Singapore advertisement that says "Low crime doesn't mean no crime."

What are the benefits investing through PhillipCapital?



Notified invoice financing

OK, to reduce the risk for Funding Societies investors invested through PhillipCapital, only invoicing financing is allowed. Invoice financing is considered  lower risk because the lending term is 1-4 months only. And, to further reduce the risk, only notified invoice financing is allowed. Notified invoice financing means the buyer will directly pay to Funding Societies instead of seller. With this arrangment, it prevents seller from misusing the payment for other purposes.

Car dealer financing

This financing option is only available to PhillipCapital. In this financing, Funding Societies will lend to a car dealer for their purchase of used cars, with their major shareholder as personal guarantor. The financing rate is 70%, meaning if a car is worth 100k, Funding Societies will only lend 70k. so, it means some margin of safety. The term is that the dealer must sell the car within 3 months and repay Funding Societies. If it fails, the car will be repossessed by Funding Societies for sale through their network of car-sellers.

Funding Societies has done trial run for car dealer financing, and in their 500+ cases, no default has happened and the average repayment period is 1 month. So, this looks exciting because direct investors cannot participate, and the returns is quite high.

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To sign up as Funding Societies investors through PhillipCapital, investors will need to sign up a consent form to authorize Funding Societies to auto-invest the money. Investors can log-in to Funding Societies website to monitor the activities and performance.