If You've Ever Wanted to Start Your Own Hawker Business, Now's Your Chance!

https://loanstreet.com.my/latest-base-rate-blr-fixed-deposit-interest-ratesFun fact: did you know that hawker owners can actually earn quite a lot of money every month, depending on how dedicated they are to their trade? Here’s one example for you: two UniKL graduates decided to open their own shop selling a corn drink made using their own secret recipe. As a result of that bold move, they managed to reap in profits of up to RM1,500 a day. Fuhhh!

If you’d like to open your own business and be successful too, here’s your chance to do so! After the tabling of Budget 2019, Malaysian Finance Minister Lim Guan Eng has said that the government would allocate RM2bil under the Business Loan Guarantee Scheme (SJPP), where they’ll provide up to 70% incentives for SMEs to invest in automation and modernisation.

As part of the SME ecosystem, new hawkers would also be able to benefit from this. This good news will definitely lessen the concerns of many newbies who’re still trying to find the funds to start up their business.

There’re actually quite a number of ways for you to gain your initial capital without breaking the bank (apart from SJPP lah that is). Below, we’ve listed out the 5 types of financial assistance that you can apply for as a hawker here in Malaysia.

What's covered in this article?

1) Micro-credit Transformation Scheme - under 1Malaysia Hawkers and Petty Traders Foundation (YPPKM)

While the name may be quite a mouthful, this scheme was specifically established in order to cater to hawkers and peddlers. It offers a business loan and in order to be eligible for it, the requirements are as follows:

Malaysian aged between 18-60 years.
Has no previous record of bankruptcy.
Applicants must have a minimum of income of RM1,500 per month.
A guarantor must be present to support the application.

The micro-credit loan amount available is from a minimum of RM30,000 to a maximum amount of RM50,000 with interest rate ranging from 12.3% to 20%. Loan tenure is between 3 to 5 years. Additionally, a 2% administration fee is also applicable.

Check out the YPPKM official website for more details.

2) PROSPER Runcit - under Perbadanan Usahawan Nasional Berhad (PUNB)

PUNB was established with the aim to increase the number and quality of Bumiputera entrepreneurs. One of the main steps taken is to support them in getting involved with the nation’s economy – by providing financial and corporate aids. Offering a number of business funding schemes, one of it is the PROSPER Runcit, and the requirements for eligibility are:

Bumiputera status.
18 years old and above.
Possess strong entrepreneurial characteristics such as honesty, confidence, resilience, positive attitude, creativity and high level of self-discipline.
Must be able to finance at least 10% of the total project cost.
Favourable records with financial institutions.
Willing to work full-time.
Willing to attend courses identified by PUNB.

As for the conditions associated with this type of financial assistance, the major ones include:

Shari’ah compliant financing products
Financing from RM50,000 up to a maximum of RM1mil.
Financing exceeding RM300,000 is only for a ‘Private Limited’ company. Exception is only for petrol station businesses.
Payment tenure up to 10 years.
Corporate development and monitoring.
Training and entrepreneur development.

Check out the PUNB official website for more details.

3) Tekun Niaga Financing Scheme - under Tekun Nasional

Another institution that provides financial assistance worth checking out is the Tabung Ekonomi Kumpulan Usaha Niaga (TEKUN) Nasional. There are 2 types of loans offered:

Small Loan Scheme (SPK) – Between RM10,000 to RM50,000 with payment period up to 5 years.
Medium Loan Scheme (SPS) – Between RM51,000 to RM100,000 with payment period up to 10 years.

Upon loan approval, entrepreneurs must observe the requirements of the TEKUN Management Fund Contributions, which are:

Pay a total of 4% of the loan’s value (per annum) throughout the loan period. This payment should be made together with the loan repayments.
Required to pay the minimal processing fee of 1.5% (or lower) from the loan amount applied.
Entrepreneurs are required to make savings of 5% of the loan value (per annum). These savings should be made together with the loan repayments.

One other perk of applying under this scheme is that you’ll be protected under the Loan Insurance and Life & Accident Insurance (Borrower) set by TEKUN Nasional during the entire loan period.

Check out the TEKUN Nasional official website for more details.

4) Small Business Financing (SBF) - under SME Bank

Wholly owned by the Ministry of Finance and regulated by Bank Negara Malaysia (BNM), the SME Bank is a leading Development Financial institution that you could consider as well. The SBF scheme is specially created to help you increase your product’s marketability.

Some of the details regarding this type of financial assistance are as below:

Loan amount from a minimum of RM100,000 to a maximum of RM750,000 with repayment period up to 7 years.
Applicant must be a Micro Enterprise Company with minimum 51% Bumiputera equity ownership with good credit records.
Chief Executive Officer/Managing Director must be Bumiputera.
The company is in operation for at least 2 years and profitable in current year.
Minimum turnover of RM150,000 (annual sales).

The margin of financing is set up to 100% with required profit rate at 7.5% per annum and additional collateral such as:

5% cash collateral
Sinking fund
Joint and several or personal guarantees of directors/shareholders

Check out the Small Business Financing official website for more details.

5) Business Accelerator Programme (BAP) - under SME Bank

This programme is another collaborative effort with SME Corporation Malaysia, with the objective of providing financial assistance to SMEs. It’s to assist the SMEs in strengthening their core business, building capacity and capability, as well as facilitating access to financing.

The main aim of BAP is to fund the initial fixed asset and working capital. If you’re a new hawker, then this might appeal more to you. Why? Because it only requires you to operate for at least 6 months as compared to 2 years in SBF. Other required criteria to qualify are:

Meet the SME definition.
SME Corporation’s SCORE 2 or higher.
The company is at least 60% owned by a Malaysian.
Large enterprise ownership of not more than 20%.
Valid business (i.e. business license from local authority, valid business premise).
Full-time business operator.
The company has been in operation for at least 6 months.

The financing limit is between a minimum amount of RM50,000 to a maximum amount of RM1mil with the tenure as follows:

For fixed assets, it’s up to 10 years, inclusive of grace period up to 24 months.
For working capital, it’s up to 7 years inclusive of grace period up to 12 months.

The margin of financing has been set for up to 90% for fixed assets. While for working capital, it’s up to 100% with the required profit rate at 4% per annum. Other additional collateral are:

Fixed asset to be financed.
Minimum 10% cash collateral for working capital financing.
Joint and several guarantees of directors/shareholders.

Check out the Business Accelerator Programme (BAP) official website for more details.

So what are you waiting for?

In short, hawkers will find that there really is no shortage of proper financial assistance for them in Malaysia. It’s basically just a matter of knowing where to look for one and how to secure it. Once selected and approved, you are well on your way to leading your very own successful hawker business venture!

Remember to always keep a close eye on your business expenditures so you know where your money is flowing to, and implement cost-saving practices at all times. Best of luck!