Small and medium enterprises (SMEs) represent the backbone of Thailand. SMEs account for 81% of employment in Thailand and contributes 37% of the nation’s GDP. They also represent the main innovation driver in many sectors, and exploiting their full potential would benefit both the economy and society in general.


A major hindrance faced by SMEs in pursuing opportunities for growth, development and entrepreneurial initiatives is access to external financing. According to a study by Thai Credit Guarantee, there is a significant proportion of SMEs with no access to financial institutions and require external financing. 58% of SMEs are not eligible to borrow from financial institutions and 17% of SMEs view access to finance as a major barrier.


According to recent study by Deloitte, financing challenges faced by SMEs include lack of information and advice from financial institutions, high degree of complexity and inconvenience related to the loan application process, inadequate qualification of SMEs (e.g., they have less than 3 years of operations), high expenses, fees and interest rate charged and lack of collateral.

This is further compounded by the implementation of Basel III across banks which requires greater risk weights to be assigned for SME loans, which may affect SME lending volumes and SME loan interest rates.

FinTech has recently captured a lot of public attention and for a good reason. If given the right environment, FinTech could become one of the most powerful tools to support small businesses and thus stimulate sustainable economic growth. One such financing channel is Marketplace (peer-to-peer) lending.

Marketplace lenders can provide SMEs with funding where banks are unwilling or unable to do so.

Marketplace lending matches borrowers and lenders through online platforms. Borrowers are able to obtain funds quickly, and with better terms than traditional financial intermediaries. Marketplace lenders can provide SMEs with funding where banks are unwilling or unable to do so. Countries with the highest SME marketplace lending volumes include China, the US and the UK.

Benefits for SMEs

Access to funding

Unsecured lending is the most common form of marketplace lending to date. As such, no collateral is required. Small businesses benefit especially from this, particularly in the service sector. Often, such businesses have rather stable cash flows but no tangible collateral that banks could lend against.


Loan applications can typically be completed within a few hours, and do not involve a visit to a physical bank branch. Funds are then usually made available within less than one week, compared to four to five weeks for banks. Some, such as the European lender Zencap, expect to provide a definite answer within less than 48 hours. In a tight liquidity situation, speed can make a significant difference for a small business.


In some instances, marketplace lenders may provide better loan terms than traditional financial intermediaries. They can pass on benefits of their lower cost structures to borrowers and can potentially price risk more accurately with the use of innovative credit scoring models. Such models are heavily data-driven, employ semi-automated risk assessment methods and leverage non-traditional data points. This allows for assessing credit risk where banks have traditionally not been able to do so.

Directing capital to productive use

Participation by institutional investors in marketplace lending platforms is picking up. In the US, more than 70% of lenders in such platforms are institutional lenders such as hedge funds, pension funds and asset managers.

Marketplace lending provides an opportunity for idle funds to be invested as growth capital for smaller companies

In many emerging markets where only a limited number of asset classes are invested in, capital often flows into real estate as a preferred alternative to bank savings. As rightly put by a World Economic Forum report on the Future of FinTech: “Marketplace lending provides an opportunity for idle funds to be invested as growth capital for smaller companies. As such, real growth, rather than nominal value appreciation, can be created for a national economy.”

If you are a business owner or startup and looking for an alternative financing to grow your business, come meet us at SMART SME EXPO 2017, 29th June to 2nd July, Hall 3-4, Impact Arena Muangthong Thani (Booth 39). We offer free credit score assessment and #GetMyRate service, where you will get a personalised rate from us. We look forward to meeting you all.