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TOPIC 12: TRENDS & DEVELOPMENT (CROWD FUNDING (Types (Equity crowd…
TOPIC 12: TRENDS & DEVELOPMENT
SMALL AND MEDIUM ENTERPRISE (SME) FINANCING
Sources
of Government-assisted Funding
Eligibility requirement
Companies must be at least 30% owned and no more than 200 employees
SME Working Capital Loan
Government will co-share 50% of default risks for loans of up to $300,000 per SME
SME Go Digital Programme
Targeted at SMEs who are ready to leverage on digital technology to improve productivity
SME Equipment and Factory Loan
Local SMEs can tap into this financing for automating and upgrading their factory and equipment
Loan Insurance Scheme (LIS)
Provide lenders with additional protection from the insurance taken out on SME borrowing
Internationalization Finance Scheme
Companies acquiring revenue generating fixed assets, developing overseas projects and sales are eligible
CROWD FUNDING
Definition
Peer-to-peer lending
Borrowers with appealing business ideas share through online platforms
Types
Donation crowd funding
Finance community based projects
Rewards are intangible to contributors
Debt crowd funding
Peer-to-peer lending
Lenders expect a tangible financial return from their investments
Equity crowd funding
In exchange for the money, lenders receive a share in the project
Lenders benefit is value goes up
Lenders lose all money if project fails
FINANCIAL TECHNOLOGY (FINTECH)
Bitcoin
How it works
Made up of chains of information organised into blocks
Contains all confirmed transactions
New information broadcasted to other computers for validation
Benefits
Decentralisation
No longer a need for a trusted third-party to validate/clear transations
High availability of information
Reduces delays due to manual verification required in a system downtime
Cost saving
Replace the multiple systems setup, simplifying an organisation IT infrastructure and reducing maintenance cost
Reduce fraud risk
Better data integrity and more robust checks and balances in processing transactions
Disadvantages
Government regulation
Additional regulations can result in higher compliance costs
Scalability
Technology performance may not meet users' expectations
Relatively immature techonology
Uncertainty which standards to adopt, lack of industry-wide take up, security and privacy concerns which needs to be addressed through more research and testing