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FinTechs belonging to this category act as a loan creditor (even short and very short-term loans), are broking loans or receivables or conduct factoring of loans, which were given to private or business customers. In this business area you also find “peer-to-peer” (P2P) services, in which FinTechs enable a multitude of users to give loans (and brokered by the FinTech-platform) to other users or companies.
Finetrading is hereby a financial service of FinTechs, where they buy due receivables and grant the debtor an extension of payment time.
As an ancillary service some FinTechs offer alternative credit assessment services to check the solvency of a borrower.
Introduction
Attitude of the country towards loan-giving-, factoring-, brokerage-, finetrading- and ancillary services
The development of FinTech technology for loan-giving, factoring, brokering and finetrading is generally supported by the Singapore government as part of the wider suite of FinTech services in the ecosystem. The Monetary Authority of Singapore (MAS) has recognized the importance of fintech in enhancing SME access to credit, but largely focuses its SME loan initiatives on fostering greater support, collaboration and ease of borrowing between SMEs and banks or financial institutions. Leading local banks have started to expand their services into peer-to-peer lending, such as DBS’s SME Banking peer-to-peer lending platform, signifying that there is an increasing demand for such services.
Legal affairs
Obligations and requirements to provide loan-giving-, factoring-, brokerage-, finetrading, and ancillary services described above
Loan-giving: Persons in the business of providing loans, that is to carry on the business of lending sums of money in consideration of a larger sum being repaid, are presumed to be a moneylender subject to licensing under the Moneylenders Act 2008 (Moneylenders Act) and regulations prescribed by the Ministry of Law, unless exempt or excluded. This licensing framework includes lenders that utilize the internet to provide their services. Exempted moneylenders must be expressly approved for such exemption by the Ministry of Law, while excluded moneylenders must meet the requirements under the Moneylenders Act to be considered an excluded moneylenders. Excluded moneylenders are typically entities that are subject to regulation under other laws, such as real estate investment trusts, lenders to accredited investors, pawnbrokers and credit societies.
Factoring: Factoring is unregulated when structured as B2B transactions (e.g., invoice discounting/factoring) as it does not involve consumer credit. There is no specific statute that governs commercial factoring in Singapore. However, a person which operates a crowdfunding platform to facilitate invoice factoring activities is required to hold a Capital Markets Services (CMS) licence issued in accordance with the Securities and Futures Act 2001 (SFA) if the activities involve: