Looms introduces a new era in SME lending with its fully configurable products designed specifically for the unique needs of small and medium-sized enterprises in Asia. Representing the economic backbone of the region, the 70 million MSMEs in ASEAN are crucial for development and growth, yet face a significant $5.2 trillion funding gap annually.
The Backbone of Asian Economy: MSMEs
Micro, Small, and Medium Enterprises (MSMEs) are fundamental to the Asian economy. In ASEAN alone, there are approximately 70 million MSMEs, representing a staggering 97.2% to 99.9% of total business establishments. Despite their pivotal role, MSMEs face a substantial funding gap. According to the World Bank, this gap amounts to $5.2 trillion annually, highlighting the critical need for effective lending solutions.
Funding Challenges and Opportunities
Initial funding for nearly 70% of SMEs in Southeast Asia comes from personal savings and support from family and friends, underscoring the limitations in traditional banking systems. Only about 23% of SMEs rely on traditional banks, while a mere 7% turn to alternative sources like FinTech companies. This scenario presents a significant opportunity for lenders to step in and offer more accessible and tailored financial solutions, a gap Looms is poised to fill.
Looms’ Approach to SME Financing
Looms leverages digital technology to address the unique financing needs of SMEs. We understand that traditional credit models often overlook the dynamic nature of SMEs, especially those operating informally. By using alternative data sources, Looms develops more inclusive and reflective credit risk models, making finance more accessible to a wider range of businesses.
The Digitalization Drive
Digitalization is reshaping SME operations. Online-to-Offline (O2O) platforms are a notable trend in Southeast Asia, enhancing business efficiency and market reach. Looms integrates these digital trends into its lending models, facilitating more efficient transaction processes and broader access to finance.
Inclusive Growth and Connectivity
Looms recognizes the varied digital paths of MSMEs. Whether it’s about enhancing operational efficiency, gaining business intelligence, or achieving customer-centric outcomes, our solutions are adaptable to these diverse needs. This approach is particularly vital in rural areas, where infrastructure and digital connectivity are often limited.
Policy and Infrastructure Investment
The majority of MSMEs operate outside major cities, in areas where physical and digital infrastructures are lacking. Looms advocates for and supports policy initiatives and infrastructure investments that aim to bridge this digital divide, enabling more MSMEs to contribute effectively to the economy.
Conclusion
Looms is at the forefront of transforming SME lending in Asia. By offering tailored, digital-first lending solutions, we are not only addressing the immediate financial needs of MSMEs but also empowering them to thrive in a rapidly evolving economic landscape. Join us in fostering a more inclusive and prosperous future for SMEs across Asia.
