SINGAPORE (March 17): EpiCentre Pte Ltd, a subsidiary of Catalist-listed Apple products retailer EpiCentre Holdings, has raised $1 million in borrowings on crowd-financing platform, MoolahSense.

This is the first time a unit of a Singapore Exchange- listed company has turned to the site for loans. It is also the largest amount raised on the platform.

On March 14, EpiCentre launched two campaigns, each seeking $500,000, to purchase inventory stock and for general working capital. They were funded within 48 hours by about 330 individual investors.

EpiCentre will have to repay the principle amount and a nominal interest rate of 13.5% per annum.

One tranche is due monthly and the other quarterly. On March 17, a third campaign for $500,000 was launched. EpiCentre has plans to raise up to $2 million.

Why has the company turned to an online platform for funds? EpiCentre CEO Jimmy Fong did not respond to queries from The Edge.

The company had in fact reduced its borrowings last year. For 1HFY2015 ended December, short-term borrowings stood at $5.2 million versus $7.1 million a year ago. It has no longterm debt. Cash and cash equivalents stood at $4.4 million, putting net debt at just 14.3% of equity.

But EpiCentre’s borrowing costs have gone up. Interest expenses increased 133% y-o-y in 1HFY2015.

That helped to push EpiCentre’s bottom line further into negative territory. The company recorded a net loss of $0.8 million in 1H, compared to earnings of $0.2 million the year before.

MoolahSense and other crowd-financing sites such as Capital Match and Funding Societies make a profit by getting a cut from lenders or borrowers. They attract investors by providing a yield from 9% to 24%.

However, chief executive of MoolahSense Lawrence Yong says such sites may seem more attractive as banks tighten their credit portfolios. “Sometimes, banks adjust their credit portfolio to reduce exposure to certain sectors, and this may affect the good companies in the sector hinder them from taking certain opportunities.” Yong says the site has received more queries from listed-companies in the last quarter, most looking for short-term loans to finance new contracts or projects. They may also need the cash as deposits to tender for certain contracts. Loans may range from a few hundred thousand to one or two million dollars.

Choo Kee Siong, United Overseas Bank’s group head of enterprise banking says the bank’s “loan book has seen steady growth as we provide more financing to our SME customers who are looking to enhance productivity and to expand overseas.” But he adds that the bank recognises the demand for alternative funding sources. UOB recently made a US$10 million investment in global equity crowdfunding platform, OurCrowd.