Investor FAQ

P2P Financing is already a well-established concept in the USA, UK, and China, amongst many other countries. It is an online marketplace, generally for SMEs seeking an alternative source of financing.

Through P2P Financing, the SMEs or the Issuers, have greater access to funding for their business growth, whilst the Investors are provided an alternative investment opportunity for attractive returns from their investments.

FinPAL is a registered market operator for P2P Financing Platform, providing SMEs in Malaysia an alternative source to raise funding, whilst offering the Investors the opportunity to invest in the business needs of these SMEs.

In this respect, FinPAL’s principal role is to:

A) Perform introductory functions on behalf of prospective issuers and investors for the issuance of notes

B) Operate the financing platform to ensure a streamlined process for the issuance of notes

C) Facilitate the payments and collection of sums due under or in connection with those Notes

Your information will be shared with relevant parties on need basis only unless an explicit consent has been granted by you. All parties involved are subject to the confidentiality clause in the agreement.

Also, we have multiple safety firewalls with established privacy procedures to ensure the utmost security to your shared information. For more details on our privacy policy, feel free to read through the Privacy Notice published on our website.

The FinPAL’s P2P Platform is a very simple, quick and easy to use web-based application. Some administrative procedures and documentations are inevitable, but our user-friendly system will guide you through the whole process. For further guidance and clarification, you may also contact our Customer Service.

Individuals of at least 21 years old and Corporate are eligible to apply as our Investor. For Malaysian resident only.

The minimum investment sum to place with FinPAL’s P2P Platform is RM 1,000.

A) Simply click apply as Investor and create your application.

B) Fill out the application form and upload the required documents onto the Platform.

C) Upon approval, we will send you an Investor Agreement within 48 hours for execution.

D) Once you submit the Investor Agreement, we will activate your investment account within 1-2 business days

E) An Investor Trust Account Number will be provided to you and please deposit your investment sum into the designated Account.

It depends on whether you are applying as an individual or on behalf of your institution or corporate.

If you are an Individual Investor, please provide a copy of Mykad or Passport if you are not a Malaysian Citizen.

If you are corporate investor, please provide the following documents:

A) Most recent Constitutional Document, including;

  1. Certificate of Incorporation/Partnership or any other reliable references
  2. Latest Form 24/Form Section 78 and Register of Directors/Form 49 as prescribed by the Companies Commission of Malaysia or equivalent documents for Labuan Companies or foreign incorporations, or any other equivalent documents for other type of legal persons for identification of Directors/Shareholders/Partners.
  3. Memorandum/Articles of Association

B) Letter of authority or directors’ resolution, where applicable

C) MyKad for Malaysian/permanent resident or passport for foreigner of the person authorized to represent the company or business

In addition, depending your investment sum and/or Investor Category, additional document / declaration may be required. Our online application form will guide you through the documentation that you will need to provide in order to qualify as an investor and comply with our Anti Money Laundering (“AMLA”) and Know Your Customer (“KYC”) procedures.

The Investor Category is in accordance with your investment limit subject you meeting its respective conditions:

  Retail Investor Advance Retail Investor Sophisticated Investor
Investment Limit (RM equivalent) RM1,000 to RM50,000 RM50,001 to RM250,000 Above RM250,000
Conditions Nil    
– Individuals Total Income > RM100,000 Total net personal assets > RM3 million
– Corporate Total Net Assets > RM1 million Total Net Assets > RM10 million

In addition, to qualify as Sophisticated Investors, you shall be the High Net Worth Individual or Institution with reasonably investing experience and knowledge, and/or having a track record of investment.

You will receive an answer regarding your application within 3 Business Days.

FinPAL does not take any deposits directly.

Your investment funds are held on trust on your behalf in a segregated Investor Trust Account managed by TMF Trustee Sdn Bhd, a licensed trust company in Malaysia.

To maximise your benefit, we may arrange cash management activities for your undeployed fund maintained in Investor Trust Account. Any interest generated thereof will be subject to the Interest Sharing Scheme with FinPAL.

You can withdraw unutilised funds from your account at any time at no costs. Invested funds or any funds earmarked (i.e. funds promised in investment of Issued Notes, but yet to be disbursed to Issuers) cannot be withdrawn until the Issued Note gets repaid.

You can make a withdrawal request through “Withdrawal” button on your dashboard. Upon receiving your request, we will process your withdrawal within 3 Business Days.

Funding opportunities i.e. Issued Note listings are available for viewing once you sign up and place an investment sum with us.

Once your investment account is activated please use the following steps to begin your investment in P2P Platform:

A) Sign into your account.

B) Go to the ‘Issue Note Offered’ section to view the ongoing funding opportunities.

C) Click on the “View Details” of your interested Issued Note to view the Factsheet which provides details of the Issued Note and business.

D) Click “Invest” on the Factsheet, and input the amount you want to bid for the interested Issued Notes. Enter the OTP verification code and click on “Bid” to complete.

E) Alternatively, you may empower and authorise our Platform to select Issued Notes on your behalf automatically through our “AutoBid in accordance to your pre-defined investment criteria.

You can easily control your investment parameters through AutoBid, pre-setting your target return, duration, exposure limit, risk appetite, and other parameters. The AutoBid will automatically place bids on behalf of you based on your pre-set criteria. These settings can be updated as often as you like.

You are investing in the business needs of Malaysia SMEs by financing their invoices to major retailers and hypermarkets.

Our targeted Issuer represents the existing SMEs with established service records.

All Issuers must pass through our stringent due diligence and credit checks.

In order to protect the Issuer’s business interest, the Investors will only know the name of Issuer to whom they subscribed for the Issued Notes upon their successful investment. Prior to that, we are unable to broadcast the identity of the Issuers, but will provide a detailed factsheet about our assessment of the Issuer.

We welcome Investors to contact us for further information on any specific Issuer for which the investors have invested in. We would strive to furnish the Investors with the requested information on a best-effort basis.

You can view the details of your interested Issued Note in the Factsheet, which contains the following key information:

A) A brief description about Issuer’s business (no name mention)

  1. Year of establishment
  2. Year of dealings in B2B’s ecosystem, where applicable
  3. Type of establishment
  4. Business nature, including the industry served
  5. Type of goods and services offered

B) High level financials for the latest financial year

  1. Net assets
  2. Annual revenue
  3. Annual net profit

C) FinPAL’s risk grading based on our credit assessment

D) Brief description in respect of the funding purpose

The minimum amount that you may place for each Issued Note is RM100.

No restriction as to the maximum amount that you can place for each investment / Issued Note, subject to the investment limit in accordance with your Investor Category.

You may specify the maximum amount for each investment / Issued Note in the AutoBid setting.

As a form of good investment practice, we strongly encourage you to diversify your investment across multiple Issued Notes.

Depending on the type of financing product you wish to invest, the investment tenor may range between 1 month to 6 months.

To obtain a longer tenure return, you can always reinvest your fund upon you receiving back your investment and returns, into other Issued Notes, subject always to the availability of the Issued Note opportunities that match your investment criteria.

We currently offer Issued Notes denominated in RM only.

We adopt a risk-based pricing approach through our proprietary risk scoring model. Each Issuer will be assigned a risk grading after our detailed assessment of its financial standing and credit worthiness. The assigned risk grading for each Issuer will determine the applicable interest rate for its Issued Notes.

As for most investments, higher return come with higher risk. We assign higher interest rates for the lower risk grading Issuer to compensate for the higher risks that investors assume.

Each Issued Note is listed for your investment decision for 3 Business Days or up until its subscription reaches 100% of its intended funding (“Target Amount”), whichever is earlier.

The Issued Note is deemed successfully hosted and we will disburse the fund to the SME only, if the subscription for the Issued Note reaches a minimum 80% of the Target Amount by the end of 3rd Business Day. Otherwise, we will cancel the listing of the Issue Note.

Please also take note that all investment will be allocated on a first-come-first-serve basis.

Once you select and confirm your investment (whether through manual selection or via AutoBid selection criteria), you have made a promised financing to the Issuers. To ensure fairness to the Issuers and other Investors, you would not be able to withdraw your investment decision as any withdrawal would disrupt the funding process. Not forgetting the other investors who may have wanted to invest in the same Issued Note, but were unable to do so under the first-come-first-serve system.

Hence, kindly review your investment selection carefully before confirming your investment.

You will only get your returns and investment back upon Borrower’s repayment.

Repayments from Borrowers are due on a date predetermined upon its hosting onto our Platform. The system is auto-updated with repayment status on daily basis, in which you may view by login to your account.

FinPAL currently offers 2 types of financing products: Invoice Financing and Short Term Working Capital Financing, the key product characteristics of which as below:

  Invoice Financing Short Term Working Capital Financing
Target Issuer Mainly SMEs and sole proprietors supplying goods and services to major retailers, with invoices raised through B2BC’s E-Invoicing Platform. Mainly SMEs and sole proprietors and mainly from within B2BC’s ecosystem.

May offer to customers outside B2BC’s ecosystem

Financing Tenor 1 month to 4 months Up to 270 days
Collateral / Security No physical collateral No physical collateral

Corporate and/or personal guarantees may be required for high value financing and/or risky Issuer/issuance

Repayment Mode Bullet Delayed monthly instalment;

For financing up to 120 days (4 months), repayment will be on Bullet basis.

For financing above 120 days, instalment repayment on every 30 days interval, starting from 120th Day. Each repayment tranche represents a Promissory Note under the Financing Request.

Invoice Financing allows the SMEs to obtain finance upfront from a third party, backing through expected cashflow from their invoices on products and services delivered. Through Invoice Financing, SMEs do not need to wait until the maturity of credit term and rely on their customers’ payment for invoices for business funding. In this essence, Invoice Financing unlock SMEs’ cashflow that tie-up with receivable invoices, with a small cost in the form of fees and interest charge.

FinPAL has obtained prior consent from the Issuers to allow FINPAL to verify the authenticated Invoice with B2B Platform. This will ensure the invoices listed in FinPAL Platform are genuine.

FinPAL does not charge Investors a fixed fee. Instead, FinPAL operates an Interest Sharing scheme with the Investors. The sharing ratio to Investors varies according to the source of interest collected.

Source of Interest Collected Sharing ratio to Investors Sharing ratio to B2B FinPal
Invoice Financing 70% 30%
Short Term Working Capital Financing 70% 30%
Bank interest on unutilised fund 70% 30%

The returns of each investor differ case by case, based on a range of factors e.g., market condition, your choice of Issued Notes, total investment size and level of diversification etc.

In view of the Interest Sharing Scheme with FinPal, your net expected return could be calculated based on the suggested formula below:

Net expected return for each financing product type* = sharing ratio to Investor % of Interest rates of selected Issue Notes

*Subject to all the Issued Notes invested are performing and non-default.

Since the investment tenor is relatively short term, investors are encouraged to re-invest, to increase the potential overall returns on your investments.

The taxability of the interest income depends on each Investor’s tax position.

Kindly consult your tax / financial advisers for independent professional advice.

Investing in any investment product places your capital at risk and so does investing Issued Notes through FinPAL. The risk presents itself when the Issuers are not able to fulfil their financial obligations to the investors; may it be due to their internal management problem, or external circumstances such as changing rules and regulation, business environments, political climate and etc..

If you are a foreign investor, you may also experience additional tax liabilities and foreign exchange risks.

Please click here to view our GENERAL & SPECIFIC RISK WARNING STATEMENT to ensure you understand the risk associated in this investment.

You may spread your risks by investing into multiple Issued Notes. Our automated allocation tool, AutoBid, can help you to do this efficiently.

Prior to being eligible to sign up into FinPAL’s Platform, we will run rigorous due diligence and credit assessment processes on each prospective Issuer, including anti-fraud checks, litigation search, credit screening, financial review and director review.

Our targeted Issuers mainly small and medium enterprises (“SMEs”) that offering goods and services to major retailers and hypermarkets, and mostly the existing customers from B2B Commerce (“B2BC”)’s ecosystem with established service records. In respect of the Issuers from B2BC’s ecosystem, FinPAL works closely with B2BC as a collaborative partner to assist in the initial screening and background checks. In supporting our credit assessment and scoring, we also employ the services of trusted Credit Bureau for independent and objective credit checks.

A rounded assessment through the credit scoring from trusted Credit Bureau, financial statement review and where relevant, enhanced analytics on the Issuer’s transactions within the B2BC’s , forms the basis of FinPAL’s scoring methodology.

Each of the Issuer will be risk-scored and assigned a risk-grading after the credit assessment. The risk grading also determines the applicable interest rate for each financing product. The Issuer will also be assigned credit limit, both at Issuer level and for each type of financing product, based on its financial standing, historical business volume and risk grading.

Each Issuer is subject to on-going monitoring for early detection of any credit deterioration. FinPAL has established a robust framework to support monitoring activities.

Consistent with our vision in helping SMEs to accelerate their business growth in a sharing economy, Issuer is allowed to make early repayment towards the Issued Note(s) as an effort to save financing costs. No penalty will be charged on early repayment from Issuers. In this respect, the interest on the Issued Notes will be computed on a daily basis from the date of the note’s issuance until such early repayment date.

An Issuer is considered as delinquent the moment the Issuer missed payment(s) for any one of its issued Note(s). FinPAL will pursue for payment rigorously to ensure that such Issuer will not default on its Issued Notes.

In such event, , the Issuer will no longer be allowed to list any new Issued Note(s) until such a time when the Issuer settles all its delinquent note(s) in our P2P Platform. We will contact the Issuer to obtain an explanation and continually send reminders to the Issuer until their Note(s) is/are fully paid. We may also submit the Issuer’s delinquent status to the relevant Credit Bureaus for blacklisting.

At the same time, a penalty interest (calculated on daily basis) will be charged on the delinquent Notes (if the Notes is not settled within the grace period of 7 calendar days from the due date) to compensate Investors.

Throughout the process, we will keep you as an Investor informed and updated on the progress.

In general, an Issuer is considered to have defaulted when the Issuer fails to repay any of its Issued Note(s) after 90 days from the due date of the said Note(s).

In such rare event, FinPAL will use best endeavour to resolve defaults and/or recall repayment for defaults, including but not limiting to the below:

A) Restructuring the defaulted Issued Note(s) to stretch the repayment periods if FinPAL receives justified request from the Issuer;

B) Pursuing the guarantor for repayments or exercising rights on the guarantee(s) given, if any;

C) Outsourcing to collection agency to pursue fund collection; and

D) Where necessary, taking legal action against the Issuer.

At the same time, a penalty interest will continue be charged on the defaulted Notes (subject to any restructuring and/or recovery terms).

Throughout the process, the investor will be informed on the payment status of the Issued Notes and situation of the Issuers.

In view of our greenfield operation, we do not have sufficient transaction histories for meaningful statistic. An indicative probability of default by reference to the statistics of trusted Credit Bureau, as below:

Risk Grade Description Probability of Default
A Strong < 1.0%
B Good 2.5% to 3.5%
C Fair 4.0% – 5.0%

Please note that the probability of default above serves as reference for your investment consideration only and will not necessarily be a reliable indicator of future default rates.

FinPAL strives to keep default rates as low as possible through our tight credit processes, to enable Investors to secure healthy return.

In the event of any delinquent and/or defaulted Issued Note(s), FinPAL may incur costs such as legal fees and collection charges in recovering the Issued Notes amount from the Issuer. These costs if incurred, may be reimbursed and deducted from the recovery amount collected from Issuer should the available reserve fund of the Issuer insufficient to cover such costs.

In such cases, Investor will receive the net recovery amount in accordance to his proportion of investment. In any circumstances, FinPAL will use best endeavour to maximise recoveries from Issuer on behalf of Investors.

FinPAL does not hold any tangible collateral from the Issuer as a security against the Issued Note(s).

However, depending on the credit assessment of the Issuer, FinPAL may request for additional support from the Issuer, in the form of company guarantee or director’s guarantee before approving the Issuer’s application.

Your investment funds are held on trust on your behalf in a segregated Investor Trust Account which cannot be transferred to FinPAL Accounts. Additionally, FinPAL has entered into a comprehensive living will arrangement with a regional based trustee as part of business continuity plan.

In the event that FinPAL goes out of business or become insolvent (as remote as it may sound), these arrangements will ensure all transactions are settled with no business disruption. The Issued Notes that have been successfully issued on the FinPAL platform will be unaffected with the Issuer’s financing obligation to Investors remain enforceable, and Investors will continue to receive their repayments and returns.

Yes, FinPal is a Registered Recognised Market Operator, governed under Section 34 of Capital Markets and Services Act 2007 (CMSA) by Securities Commission of Malaysia (“SC”).

Currently, there is no rule restricting you to register as Issuer and Investor simultaneously. You will be required to open separate accounts for each, using different email addresses.

In such event, you are advised to manage your account properly and not to invest into your own Issued Notes so as to avoid concerns for conflict of interests.

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Common Questions

Yes, FinPal is a Registered Recognised Market Operator, governed under Section 34 of Capital Markets and Services Act 2007 (CMSA) by Securities Commission of Malaysia (“SC”).

Currently, there is no rule restricting you to register as Issuer and Investor simultaneously. You will be required to open separate accounts for each, using different email addresses.

In such event, you are advised to manage your account properly and not to invest into your own Issued Notes so as to avoid concerns for conflict of interests.

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