Choco Up secured a US$15 million credit facility from private credit firm AlteriQ Global and completed the first drawdown, a move the Singapore fintech said was aimed at expanding growth and working capital finance for local small and medium sized enterprises.
FACILITY DETAILS AND PURPOSE
The facility was structured to provide financing to about 500 Singapore businesses, according to reporting on the transaction. Choco Up recorded an 85 percent year on year increase in financing applications from Singapore, a level of demand the company said underpinned its decision to arrange additional third party capital.
The US$15 million facility was provided by AlteriQ Global, a private credit firm, and Choco Up completed an initial drawdown under the arrangement. The fintech indicated the funds would be used for growth and working capital lending to its small business customers in Singapore, where it operates a platform that offers non-dilutive financing products to merchants and online sellers.
The structure of the facility, including tenor, covenants, and pricing, was not disclosed in the reporting. The transaction illustrates a financing path where non-bank lenders secure wholesale credit lines from private credit managers to scale direct lending to SMEs, rather than relying solely on equity or balance sheet funding.
MARKET CONTEXT AND IMPLICATIONS
The deal highlighted several trends in the regional SME finance market. First, it underscored rising demand from small businesses for alternative lending sources, as evidenced by the reported increase in applications to Choco Up. Second, the transaction showed private credit firms continuing to act as a source of wholesale funding for fintech lenders that have built direct distribution channels to SMEs.
For Singapore, where the government and financial sector have promoted a diversified SME finance ecosystem, the infusion of private credit into fintech-led lending could expand options for businesses that need short term working capital or growth capital. The arrangement also pointed to a growing segmentation in the market, with fintech platforms targeting digital merchants and niche SME cohorts that traditional banks may underwrite less actively.
From a risk perspective, the use of third party credit lines placed some emphasis on the underwriting practices of fintech originators. Where private credit funds supplied capital to lending platforms, investors typically looked for evidence of consistent origination standards, portfolio performance data, and operational controls. The reporting did not include detailed performance metrics for Choco Up's existing loan book beyond the rise in applications, so observers said diligence by institutional lenders would be central to the sustainability of such funding relationships.
The transaction also carried implications for bank-fintech dynamics. Banks in Singapore and the wider region have engaged with fintechs through partnerships, funding, and referral channels, but many continue to hold the bulk of SME deposits and some forms of secured lending capacity. The flow of private credit to fintechs could intensify competition for unsecured or merchant finance products, while banks retained advantages in balance sheet scale and regulatory visibility.
Finally, the deal reflected the broader maturation of private credit as an asset class in Asia, where managers have sought direct lending opportunities to generate yield in a low interest rate environment. For fintech lenders, access to committed wholesale capital lines helped accelerate deployment to borrowers without immediate equity raises, but it also required robust portfolio monitoring and alignment with investor expectations on risk and returns.
Sources: Fintech News Singapore