When we first stepped into the world of alternative lending, it felt like we were entering a space brimming with purpose and potential. Lending was in high demand. The returns looked strong.
And more importantly, the mission felt clear: we would help SMEs grow by giving them access to the capital they needed. If the banks said no, we’d step in — faster, more flexible, more human.
We believed we could build a business that helped other businesses thrive. But the deeper we went, the more uncomfortable truths began to surface. Truths that challenged our assumptions and ultimately forced us to confront a hard question: were we really helping?
And once we saw the cracks, we couldn’t unsee them.
Loans aren’t fuelling growth anymore
One of the first truths that hit us was this: most SMEs aren’t borrowing to grow. They’re borrowing to survive.
More than 90 per cent of the businesses we met weren’t looking for capital to expand their team, enter a new market, or invest in product development. They were borrowing to pay rent. To meet payroll. To cover overdue invoices. In some cases, they were borrowing to repay other loans.
The intent wasn’t growth. It was delay. It was survival.
But business loans were never meant to be life support. They were meant to unlock opportunity. When used correctly, they should catalyse momentum — not postpone collapse.
What we were seeing, instead, was debt being used as a crutch. Not because founders didn’t care, but because they didn’t know what else to do. And the system — lenders, brokers, sometimes even advisors — kept offering another loan as the answer.
Revenue is not rescue
If we had a dollar for every time we heard the word “scale,” we might not need to lend at all. Growth, especially revenue growth, has become the universal North Star for businesses. But scaling without sustainability is dangerous.
We’ve seen companies making US$5 million a year with negative margins. We’ve seen founders push for aggressive growth while their cost structures were leaking cash at every level. Fixed costs outpacing revenue. Staff headcount increasing without productivity gains. And the solution? Borrow more to fuel the next stage.
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But if your core business model is broken — if your margins are thin, your pricing is weak, and your operations are bloated — borrowing doesn’t fix that. It just accelerates the fallout.
Scaling a problem doesn’t solve it. It multiplies it.
How debt became too casual
Another major shift we noticed was how normalised debt had become.
We encountered founders who treated loans like lines of credit — not as strategic capital, but as a rolling buffer. Borrowing from one lender to pay off another. Stacking loans like building blocks, with little consideration for the long-term implications.
What used to be a financial decision had become a cash flow habit.
The conversation had changed. It was no longer about “Should we borrow?” It was “Who else can lend us more this month?”
But this approach doesn’t build resilience. It builds fragility. Businesses may appear to function — until the repayments pile up, interest costs mount, and options run dry.
That’s when everything falls apart. And by then, it’s often too late to course-correct.
The collapse has begun
This isn’t just theory or fear-mongering. We’re already seeing the consequences in the numbers.
According to The Business Times, compulsory wind-ups in Singapore surged over 50 per cent in early 2024 compared to the same period the year before. That’s not a small spike — that’s a trend.
These aren’t companies making graceful exits. These are businesses that ran out of money, out of credit, and out of time. These are the final chapters of the “borrow-to-survive” playbook.
And what’s most painful is that many of these businesses didn’t fail because of a lack of effort or even demand. They failed because they didn’t have the tools — or the knowledge — to manage their finances properly.
Why we had to pivot
We didn’t get into lending to hurt businesses. But slowly, we began to realise that we were participating in a system that, knowingly or unknowingly, rewarded short-term thinking. We were becoming part of the problem.
And that sat uncomfortably with us even though the money was great, I’m not going to lie.
When you realise that SMEs account for over 70 per cent of jobs in Singapore, it’s clear that this is not just a business issue — it’s a societal one. If SMEs don’t survive, neither do the jobs, nor the families that depend on them.
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So we made the hardest decision of all: to step back from lending and redirect our entire business toward something we believed was even more impactful — business financial literacy.
Not as a charity. Not as a nice-to-have. But as the core of everything we do. Because what became painfully clear was this: no amount of capital can save a business that doesn’t know how to manage it.
What SME owners need to understand
After reviewing hundreds of financial statements, and sitting down with countless founders, we discovered a pattern. Most business owners are not lazy or reckless — they’re simply overwhelmed. And what they often lack is not drive, but clarity.
If we could teach just 3 principles to every SME owner, they would be:
- Know your numbers
Your income statement isn’t just for the accountant. It’s your business’s health report. Learn to read it. Know your gross margin. Understand where your profit (or loss) is coming from. It’s not enough to see revenue growing — you need to know if it’s actually making you money.
- Plan your cash flow
Profit is not cash. You can have strong sales and still run out of money if your expenses hit before your payments come in. A simple 12-week cash flow forecast can prevent countless sleepless nights.
- Watch for red flags early
Late payments to suppliers. Increased borrowing frequency. Growing interest costs. These aren’t minor glitches — they’re flashing warning lights. Don’t ignore them.
A better way forward
Let us be clear — we’re not against lending. Lending can be an incredible enabler. But only when it’s used strategically, and supported by a solid financial foundation.
We need a new culture. One that treats debt with respect, not recklessness. We need founders to shift their obsession from top-line growth to bottom-line sustainability. We need lenders to start investing in education, not just extending credit.
And we need to build a community that celebrates responsible growth — not just rapid one. Because if the only plan is to borrow “just one more time” — the next time may be the end.
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