Issuer's FAQ

General

What is P2P financing, and why should I raise funds​?


Peer-to-peer financing, or P2P financing, is the practice of financing money to businesses through an online platform that matches those seeking financing with Investors.​​​​ It is a simple and transparent way to manage your funds, by accessing it through an online platform anytime. It is a great alternative for small and medium enterprises (SMEs) looking to raise funds for their business operations, and for Investors that are looking to diversify their portfolios.




What do the terms "Investor", "Issuer" and "Investment Note" mean?


Investor: a party who makes an investment Issuer: businesses who are seeking financing Investment note: a financial instrument (similar to a loan) used by Issuers to raise fund and provides Investors with investment returns.




How does Capsphere work?


Check out this video that explains how Capsphere works:

  • Capsphere provides financing to small medium enterprises/businesses by connecting them with investors through our online platform.
  • As the first P2P financing platform in Malaysia to adapt an asset-based approach, we provide businesses with capital to purchase assets whereas they provide collateral to Capsphere so that it acts as a protection layer for investors in case anything bad happens.
  • This way, not only issuers are able to continue funding their businesses, investors can also get enhanced returns with added security. A win-win situation!




Is P2P financing safe?


As with any investment, there are risks associated with P2P financing. These risks arise when Issuers are unable to fulfill their financial obligations and defaults on the Investment Note, due to internal or external factors. To minimise these risks, Capsphere uses the following methods:​​

  • Robust screening and credit assessment processes to ensure quality of Issuers listing Investment Notes on the platform.
  • Collateralising Investment Notes, such that if the Issuer default, some of the outstanding amount can be recovered through acquiring and re-selling the asset(s). For instance, from the example below, Syarikat ABC has a remaining outstanding of RM 25,000 that defaulted while the current collateral value is RM 15,000 (before recovery fees). Hence, we are able to off-set the defaulted Investment Note by selling the asset to recover a portion of the Investment Note.
  • Rigorous monitoring processes to identify Issuers that are at-risk of defaulting after an Investment Note has been issued, and to take any necessary precautions to prevent a default from occurring.




How is Capsphere different from other platforms? What is asset financing?


​We are the first in Malaysia to offer asset-based P2P financing. We help SMEs raise financing to purchase/refinance assets (e.g., machinery, equipment) for the purpose of growing their business. Investment Note is secured by the SME's asset, which provides a security to Investors.





Product

What is the minimum or maximum financing?


We offer Investment Note listings of RM 50,000 to RM 1 million, for up to 3 years of financing tenure.




How long will a financing application take to be approved?


We can turnaround your application in 3 to 5 days, if all the relevant documentation and information requested that we receive is accurate. After your application is approved, you can list your Investment Note on our platform. Investors have 28 days to subscribe (invest) your Investment Note. If you manage to raise sufficient funding before 28 days, you may request Capsphere to process your note earlier instead of waiting to the end of the 28 day period. In some instances, you may also qualify for a government matching service, e.g. myCIP, which aims to help SMEs to raise funding quicker on P2P platforms. We will be providing more information on the programme when it is available.




What is the process like? Can you give an example?


Our platform matches companies looking for financing with Investors seeking high returns and diversification. Let's go through an example:

  • Adam, the owner of Syarikat ABC, needs RM 100,000 to buy machines for a new factory, so he registers as an Issuer on Capsphere.
  • Adam requests for RM100,000 by listing the Investment Note for his company at 8% interest for a period of 2 years.
  • Once approved (within 14 days), the funding request is made public to Investors on our platform for up to 28 days.
  • When Company ABC raises 80% of the intended amount (RM80,000), the subscription/fund-raising is deemed successful and the funds will be released within 14 days.
  • Company ABC will then have to pay instalments to the investors for 2 years with an interest rate of 8%.
​It is as simple as that!





Interests, Fees and Charges

What are the interest rates that an Issuer has to pay?


We charge upward of 6% simple interest rate per annum. This is a flat rate. Interest rate for each Investment Note will be assessed on a case by case basis using our proprietary credit assessment model. When you are successful in applying for an Investment Note, we will send you a factsheet on the financing terms that you will be receiving, which will include financing amount, interest rate, and tenure. You can then make the decision on whether you wish to proceed with those terms. ​




What fees do you charge Issuers?


As part of the verification process, we will charge a of RM 50 fee. If your Investment Note is funded successfully, we will charge a fee of 2% to 6% of the Investment Note amount. (The exact percentage (%) charged will depend on the size of the Investment Note and tenure.) Please see below for more details: There is no need for you to manually pay for any fees since we will take the charges from the final amount that is successfully raised. There will be no charges for any listing that is unsuccessful. Issuers will be subjected to third party charges such as bank and processing fees, legal charges, and taxes. The applicable fees and charges are:

  • Verification fee : RM 50
  • Success fee : 2% to 6% of the funds raised (depending on the size and the tenure of the Investment Note)
  • Transaction fees :
    1. FPX at RM 1 per transaction
    2. IBG at RM 0.10 per transfer
  • Stamp Duty on:
    1. Issuer Agreement
    2. Investment Note
    3. Security Documents
    4. Any other documents relating to or incidental to this Agreement, the Issue Request and the Investment Note.
  • Prepayment Fee (if any) : Up to 20% of total outstanding interest on Investment Note
  • Late Payment Fee (if any): 0.05% to 0.1% daily interest on principal outstanding on Investment Note
  • Restructuring Fee (if any) : Administrative fee of 1% of outstanding Investment Note amount
  • Legal/Recovery Fees : Based on quotations given by providers.





Credit Methodology

How do you assess the credit worthiness of companies?


We will assess each Issuer using our proprietary credit assessment tool, specifically purposed for assessing SME credit.​ At the time of application, Issuers are asked to submit key information on their company; these include:

  • Financial statements
  • Bank statements
  • Information on the management team
  • Their business model.
Capsphere’s credit model provides an assessment of the health of the business and takes into account both the financial and business risk pertaining to the issuance of the Investment Note. In addition, we will also rely on credit bureaus to provide information on the Issuer's creditworthiness and previous behaviours (e.g. delinquencies). Based on our assessment of the issuer's financials, management, operations, and collateral, each issuer is categorised into a range of risk classes ranging from A (low credit risk profile) to F (high credit risk profile). These risk profiles are published on the factsheet to ensure transparency to investors of the risk levels of each issuer. ​ Throughout the period of the note, we closely monitor changes to the Issuer’s financial and business risks, and repayment behaviours to ensure that our risk classifications are up-to-date.




I am an SME business owner. What if I want to apply but I don't have a credit score or record?


​Your application will still be considered even if you do not currently have a credit score or record. ​​​​Our proprietary credit assessment tool takes into account a range of criterias, with existing credit score/record being one of the many. At the time of application, we require Issuers to submit various information and documents. Please ensure that these are complete, in order for us to make an accurate assessment for your Investment Note listing.




What is the criteria for applying to be an Issuer?​


The list of criteria that needs to be met are as below:

  • ​Registered business in Malaysia under Suruhanjaya Syarikat Malaysia (SSM) and primary business operations in Malaysia.
  • The business type must be one of the following: sole proprietorship, partnership, limited liability partnership (LLP), private limited company (Sendirian Berhad). We do not fund public companies (Berhad).
  • The business must be revenue generating, and have an operating track record of at least 1 year.





Repayment, Restructuring & Default

How do I make repayments?


All repayments can be made on Capsphere’s platform through the Issuer's dashboard. All Issuers are required to make repayments on a monthly basis according to the dates and amounts specified in the repayment schedule, found within their respective Issuer Agreement. Issuers are required to make repayments prior to the cut-off point of 11:00 a.m. GMT+8 on the repayment due date. Any repayments made after this time will be considered late. The following repayment methods will be accepted:

  • FPX (online payment gateway): Issuers may repay through FPX-participating banks as listed under PayNet’s site.
  • Bank transfer: Issuers may repay to Capsphere’s Collection Trust Account. The Account details will be provided in the Issuer Agreement.
You can refer to the step-by-step guide on how to make a repayment here.




Can Issuers repay the note in full before the agreed tenure? Will there be any discount?


Yes, you are allowed to repay the full amount of the note earlier than the agreed tenure. To do so, please submit a Prepayment Request via e-mail to contact@capsphere.com.my. The Prepayment Request must be submitted by the Issuer at least 30 days prior to the proposed redemption date. When submitting a Prepayment Request, the following information should be provided by the Issuer:

  • Investment Note ID
  • Proposed Redemption Date
  • Redemption Amount (in RM)
The proposed redemption date must be at least 6 months after the Investment Note disbursement date. Prepayments may only be requested for the full amount outstanding for the Investment Note. If your Prepayment Request is approved, you will be notified with instructions to make payment for the Prepayment Amount. Issuers will be provided with a discount on the remaining interest that is due.
  • Principal must be repaid in full.
  • All Prepayments will be subject to an administrative and processing fee. ​




What happens when there is a late payment? Do Issuers have to pay a late repayment fee?​


We have a very rigorous policy for monitoring monthly repayments. Our systems will flag repayments that are paid late, which will mobilise our team to take action to resolve the issue. Once there is a late repayment flag, we will liaise with the Issuer to ensure that the late repayment is paid back into the account within 7 days, otherwise a late repayment charge will be incurred. We pay special attention to recurring late repayments through our special monitoring procedure. The late repayment charge is calculated based on the number of days late, and some part of it will be credited to Investors as part of compensation for the delay. More information on late repayment charges can be found in our Terms & Conditions.​ ​




​What happens when the Issuer can’t repay?


​In the event that an Issuer faces an internal or external disruption to their business, and is unable to make repayments on time, Issuers may submit a Restructuring Request via e-mail to contact@capsphere.com.my. A Restructuring Request must be submitted by the Issuer at the earliest opportunity, when the need for Restructuring has been identified. When submitting a Restructuring Request, the following information should be provided by the Issuer:

  • Investment Note ID; Valid reason(s) for restructuring
  • Any documentation and evidence to support this (these) reason(s)
  • Any requested change(s) to the Investment Note's tenure
  • Any requested change(s) to monthly repayment amounts
Capsphere will process the Restructuring Request and will likely request for a meeting, should it be required. Until approval of the Restructuring Request, Issuers are still required to adhere to the original repayment schedule as set out in the Issuer Agreement. Therefore, it is important to provide early notice for a Restructuring Request. Issuers may be charged an administrative fee of 1% of outstanding of the Investment Note for restructuring. All Investors of the Investment Note will be notified as and when an Issuer requests for Restructuring, and once the Restructuring process has completed.




What happens if the Issuer defaults? How do you liquidate the asset when this happens?


​As soon as a problem with repayments has been identified, we will take every effort to get Issuers back on track, for example, through restructuring their Investment Note in circumstances where this is required. However, in some instances there will be defaults. Given that the Investment Note is asset-backed, we can seize (take ownership of) the asset financed and resell the asset in secondary markets. We have a network of resellers/secondary market platforms that we will partner with to resell the assets that are used as collateral on our platform. Once we get the proceeds from reselling the assets, we will repay the Investors Investors are repaid based on the pro-rated amount invested in the Investment Note.




How do you handle non-performing notes?


We will start by continuously contacting the Issuer to discuss any alternative methods to recover the outstanding amount. If the Issuer fails to comply, we will classify their Investment Note as default and take legal action against the Issuer.




How will Capsphere liquidate the asset?


We leverage on our management team’s and directors’ vast experience, contacts, and expertise in various fields to liquidate an asset. We will tap into multiple avenues, such as:

  • Online platforms
  • Second hand dealers
  • Contacts within the industry
to ensure that we transact at the most efficient price in the market. We will also engage a third-party recovery firm to assist us with the process.





Collateral

Why are the Investment Notes collateralised?


We are serving an unmet need in the market which is for asset/equipment financing. These assets or equipment usually cost more than what other financing facilities are able to offer. In addition, we recognize that it takes longer to pay back the equipment cost, given that it is so costly, so Issuers can finance it for up to 3 to 5 years. To be able to offer Issuers this product, we require collateralisation of assets to offset the longer tenures and higher amounts of the Investment Note. Asset collateralisation offers confidence to Investors and will attract more Investors to participate. Thus, Issuers can raise funds in a shorter period of time.




What type of assets does Capsphere fund and what can be collateralised?


We fund most assets that have a secondary market and resale value. Some examples of assets we can fund and take as collateral are:

  • Medical equipment
  • Automotive equipment
  • Manufacturing equipment
  • Sports equipment (e.g., for gyms)
  • Digital assets (e.g., servers)
  • Specialist vehicles for business purposes (e.g., forklift)
  • Solar panels




What is the process to collateralise the note?


Capsphere will work with the Issuer to put in place necessary documentation, such as an assignment, charge, or debenture over the asset. Debenture or a Charge will be filed with the Companies Commission of Malaysia, and at maturity of the Investment Note and if all outstanding requirements are satisfied, Capsphere will coordinate with the Issuer to release the Debenture or Charge with the Companies Commission of Malaysia.




Can Issuers sell the asset or my business while an asset has been assigned, charged or have a debenture?


Whilst your assets have been pledged as collateral, you may not sell the asset to any third party nor pledge the same asset to obtain any additional funding requirements throughout the Investment Note tenure unless you receive explicit permission from Capsphere. Likewise, if there are significant changes to the business circumstances (e.g., a major change in business ownership) during your Investment Note duration, we reserve the right to terminate the note and demand the full repayments as we deem fit.




Can Issuers change business location? Or can I move the equipment to another outlet/another state/country?


​You are not allowed to move or change business location including moving the equipment to another outlet/state or country unless you have obtained written approval from Capsphere. Movement of assets outside of the country is prohibited.




Why do Issuers have to pay a debenture/charge fee?


​As part of the collateralisation process, Issuers filing of charge or debenture is subject to fees by the Companies Commission of Malaysia, which will be borne by the Issuers.





Jurisdictional Limitation

What are the jurisdictional limitations of the legal arrangements?


​The agreements and legal documents shall be governed by, and construed in accordance with, the laws of Malaysia. Any dispute arising out of or in connection with the agreements and/or legal documents in connection thereto, including any question regarding their existence, validity or termination, shall be referred to and finally resolved by the Courts of Malaysia. The courts of Malaysia shall have exclusive jurisdiction.​