Capsphere

In Malaysia's dynamic financial landscape, small and medium-sized enterprises, or SMEs, often face hurdles in securing traditional bank financing. This challenge has paved the way for innovative digital lending solutions, with peer-to-peer (P2P) platforms emerging as a vital alternative. Among these, Capsphere has carved a distinct niche as Malaysia's first asset-backed P2P financing platform, offering a unique blend of security, flexibility, and Shariah compliance.

Established in 2016 as Capsphere Services Sdn. Bhd. (Company No. 1192211-H), Capsphere operates under the stringent oversight of the Securities Commission Malaysia, holding a coveted license as a Recognised Market Operator (RMO). This regulatory endorsement underscores its commitment to transparency and investor protection. Headed by CEO and founder Yoon Jun Jie, alongside directors Yoon Wai Cheong and Yoon Wai Nam, the company’s vision is to bridge the financing gap for Malaysian SMEs by connecting them with a diverse pool of individual and institutional investors.

Capsphere's core business model revolves around asset-based P2P lending. This means every financing note is secured by tangible collateral, such as property, equipment, vehicles, or even solar panels. This approach significantly reduces risk for investors while providing SMEs with access to capital tailored to their specific needs. The platform targets Malaysian SMEs that have been operational for at least one year and possess audited financial statements, focusing on key sectors like manufacturing, trade, services, and project-based contracts.

Capsphere's Financing Products and Specific Terms

Capsphere provides a range of financing solutions designed to meet various business requirements for Malaysian SMEs. Understanding these products, along with their associated rates, fees, and terms, is crucial for potential borrowers.

Diverse Loan Products

• Term Financing: This product offers capital for general working capital needs or for the purchase of assets, providing a structured repayment schedule over a fixed period.
• Invoice Financing: Businesses can leverage their outstanding invoices to unlock immediate cash flow, with Capsphere providing financing of up to 80% of the invoice value. This is particularly useful for managing short-term liquidity.
• Contract Financing: Designed for businesses engaged in project-based work, this allows advances on receivables from confirmed contracts, ensuring steady cash flow throughout project execution.
• Shariah Financing: For businesses and investors seeking ethical and faith-based financing, Capsphere offers investment notes structured in compliance with Islamic principles, ensuring transactions adhere to Shariah guidelines.

Key Financial Details for Borrowers

• Loan Amounts: SMEs can apply for financing ranging from RM30,000 up to RM1,000,000 per note, providing substantial capital for growth and operational needs.
• Interest Rates (APR): The annual percentage rate for financing notes typically ranges from 6% to 18% per annum. The actual rate depends on the assessed risk tier of the borrower and the specific product type. Term financing might see rates starting at 6% per annum, while higher-yield notes could reach up to 18% per annum.
• Loan Terms and Repayment: Capsphere offers flexible repayment periods, with tenures ranging from 6 months up to 36 months (three years), allowing businesses to select a term that aligns with their cash flow projections.
• Fee Structure: Borrowers incur a service fee of 1% to 2% of the financed amount, which is typically charged via the interest spread. Origination and processing fees are also built into the offered rate. While late payment fees are not publicly detailed, they are expected to adhere to regulatory guidelines.
• Collateral Requirements: A defining feature of Capsphere is its asset-backed model. Each loan note is secured by tangible assets such as property, equipment, vehicles, or contracts. A thorough collateral valuation is performed during the underwriting process to determine the asset's worth and suitability.

Application Process, Technology, and Operations

Capsphere streamlines the financing journey through its fully digital platform, offering convenience and efficiency for Malaysian SMEs.

Simplified Digital Application

The application process is designed to be user-friendly and entirely online, accessible via Capsphere's website and its dedicated mobile applications for iOS and Android. There are no physical branches, making it a truly digital experience.

• Onboarding: Businesses can complete a quick digital registration, often taking as little as five minutes.
• Documentation: Applicants must submit necessary corporate documents, including one year of audited financial statements, business operational history of at least one year, and relevant asset titles for collateral.
• KYC Verification: Capsphere employs e-KYC (electronic Know Your Customer) verification processes in line with Securities Commission guidelines to ensure identity and compliance.

Credit Scoring and Underwriting

Capsphere's underwriting process is comprehensive, focusing on both the asset value and business viability:

• Asset-Based Collateral Assessment: A primary focus is on the valuation and security of the tangible assets provided as collateral.
• Financial Review: A thorough review of the company’s audited accounts and business operations helps assess financial health and repayment capability.
• Risk Tier Assignment: Based on the assessment, a risk tier is assigned, which directly influences the offered interest rate. For Islamic notes, a Shariah compliance review is also conducted.

Disbursement and Collections

Once a financing note is fully funded by investors (which can take up to a 28-day funding window), the funds are disbursed directly to the borrower’s verified bank account via bank transfer. Repayments are managed efficiently through segregated escrow trust accounts, ensuring proper handling of funds. In the event of a default, the secured assets are liquidated via a court-appointed sale. Capsphere has also partnered with CGC Digital (Credit Guarantee Corporation) to offer credit guarantees, further mitigating risk for certain asset-backed financing products.

Mobile App Experience

Capsphere’s mobile application, available on Android (with an iOS version announced for future release), enhances the user experience with several convenient features:

• Auto-Invest: Allows investors to automate their investment decisions.
• Portfolio Dashboard: Provides a clear overview of investments and financing statuses.
• Shariah/ESG Filters: Helps users identify notes aligned with specific ethical or religious preferences.
• Biometric Login: Offers secure and quick access to the platform.

Regulatory Status, Market Position, and Customer Experience

Operating in a regulated environment is crucial for any financial platform, and Capsphere maintains robust compliance standards. Its unique value proposition also shapes its position within Malaysia's competitive digital lending market.

Regulatory Compliance and Consumer Protection

As a Registered Market Operator under the Capital Markets and Services Act 2007, Capsphere is under the direct supervision of the Securities Commission Malaysia. This means it adheres to strict operational standards, including maintaining a paid-up capital of at least RM5 million and utilizing segregated trust accounts for investor funds. Annual audits and Shariah advisory reviews for its Islamic products further ensure compliance and ethical practice. To date, there have been no public records of regulatory penalties or enforcement actions against Capsphere.

Measures for consumer protection include:

• The use of segregated trust accounts to safeguard investor funds.
• The inherent security provided by the asset-backed nature of all loans.
• Clear and transparent disclosure of all fees to both borrowers and investors.
• Certification of Shariah compliance for all Islamic financing products.

Market Position and Competitor Landscape

Capsphere distinguishes itself as the first mover in asset-backed P2P financing in Malaysia. Its unique differentiation lies in the requirement for secured loans and its strong emphasis on Shariah and ESG (Environmental, Social, Governance) alignment. While it competes with other prominent P2P platforms like Funding Societies, CoFundr (Crowd Sense), and B2B FinPal, Capsphere's asset-backing model and its strategic partnership with CGC Digital offer a significant competitive edge, particularly in reducing lender risk for specific products.

The company shows a strong growth trajectory, with recent partnerships, such as with CGC Digital for AR/AP financing and Alliance Bank as an exclusive fintech partner, paving the way for expansion. Capsphere projects significant revenue growth, targeting RM1.4 million by the end of FY 2025.

Customer Experience and Feedback

Customer reviews for the Android app show a rating of 3.7 stars from over 100 installs. Common feedback from users generally revolves around the funding note fill periods, which can take up to 28 days, sometimes contrasting with expectations for immediate disbursement. Interest rate variances across different risk tiers are also a point of discussion. Capsphere offers customer support via online chat, email, and phone, though public ratings on response times are not widely available.

Practical Advice for Potential Malaysian Borrowers

For Malaysian SMEs considering Capsphere as a financing option, a thoughtful approach is recommended to ensure it aligns with your business needs and financial strategy.

1. Understand the Asset-Backed Model: Recognise that your financing will require tangible assets as collateral. Ensure you have suitable assets available and understand the valuation process. This security is a core differentiator and a key factor in Capsphere's offerings.
2. Evaluate Interest Rates and Fees Thoroughly: The interest rates (6-18% p.a.) and service fees (1-2%) are competitive, but your specific rate will depend on your business’s risk profile and the collateral provided. Always request a detailed breakdown of all costs before committing.
3. Prepare Comprehensive Documentation: Capsphere requires audited financials for at least one year and proof of business operations for over a year. Having these documents ready will expedite your application process.
4. Manage Funding Expectations: While the application is digital and efficient, note that the funding window for investors can extend up to 28 days. Plan your capital needs accordingly, especially for urgent requirements.
5. Assess Shariah Compliance: If your business operates on Islamic principles, Capsphere’s Shariah Financing option provides a compliant alternative. Verify the Shariah advisory details to ensure it meets your specific requirements.
6. Leverage Partnership Benefits: Explore if your business can benefit from Capsphere’s partnerships, such as the credit guarantee from CGC Digital for specific products or potential fee discounts through Alliance Bank, if applicable.
7. Compare with Alternatives: While Capsphere offers a unique asset-backed model, it is prudent to compare its offerings with other P2P platforms and traditional banks to ensure you secure the most suitable and cost-effective financing for your SME.

Capsphere represents a significant player in Malaysia’s digital lending space, particularly for SMEs seeking secured and transparent financing. Its regulatory compliance, innovative asset-backed model, and commitment to Shariah principles make it a compelling option. By carefully considering its products, processes, and specific terms, Malaysian businesses can effectively leverage Capsphere to fuel their growth and operational stability.