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Don't Worry, the Gahmen Is Actually Wanting to HELP Your Business Grow!

BY Team Loanstreet

Updated 07 Dec 2022

One very common misperception about business loans (especially among small and medium businesses) is that they’re bad; but the question is, why bad? Many of us know someone who’s had some trouble with loans, whether they’re student loans, personal loans, property loans or, yes, business loans.

The thing is, it’s the same across the board – if you don’t properly allocate for your student loan repayments, you’d struggle. If you don’t assess your income for property mortgage repayments, you’d struggle.

Now, in terms of business loans, if you over-optimistically fail to properly plan your business, there’s a high chance that you would end up struggling, with or without a business loan.

What's covered in this article?

It’s all in the mindset

Despite what you may think, a business loan from the government isn’t a trap so they can pounce on the opportunity to destroy you in case you miss a payment! The fact is the government NEEDS its citizens to become entrepreneurs to contribute towards the country’s economy.

With that in mind, our government aims to increase that to 41% by the year 2020. That’s just a year away! As of 2017, the SME sector has contributed 37.1% to the GDP, so let’s hope we stay on track.

For that reason, there’s now an SME Loan Fund of RM4.5bil made available via commercial financial institutions with a 60% guarantee from Skim Jaminan Pembiayaan Perniagaan (SJPP), including a RM1bil fund for Bumiputera SMEs.

Furthermore, the corporate income tax rate has been reduced from 18% to 17% - only for SMEs with less than RM2.5mil in paid-up capital as well as for taxable income of up to RM500,000.

If you’re already operating a business, you might be thinking, “Okay, but I don’t actually need a business loan now.”

It’s no surprise; if your sales are lagging, you’re either scared to death of the idea of increasing your monthly expenses, or just happy with your current sales because they cover your monthly costs. If that’s your train of thought, then you wouldn’t actually feel the need for more funds. This is where you need to open your mind to the flip side – could you tap on the potential of your business as well as bring down the costs with more employees and better equipment?

Beyond that, if you had more funds when you started off, would you have gotten a leg-up on your current competitors? Another point to consider is that, if your company were registered under ‘Sendirian Berhad (Sdn Bhd)’, the liabilities that would arise should you default on your loan would be limited to your business entity, and not extend to yourself.


Know your industry well

In Malaysia, SME funding depends on the nature of the business. This means that there are specific ministries which handle financing for those that fall under them. Below is a list of ministries that are involved in funding Malaysian SMEs:

1) Ministry of International Trade & Industry (MITI) Malaysian Industrial Development Finance Berhad (MIDF) Soft Loan Schemes for Service Sector (SLSSS) Services
Soft Loan for SMEs (SLSME) Manufacturing & Services
Bank Perusahaan Kecil dan Sederhana Malaysia Berhad (SME Bank) Tabung Usahawan Siswazah (TUS) All
Young Entrepreneur Fund Services
Tabung Pembangunan Pengangkutan Awam (TPPA) All
SME Corporation Malaysia (SME Corp. Malaysia) Bumiputera Enterprise Enhancement Programme (BEEP) All
SME Emergency Fund (SMEEF) All
2) Ministry of Finance (MoF) Malaysian Technology Development Corporation (MTDC) Business Start-Up Fund (BSF) All
Cradle Fund Sdn Bhd (Cradle) Angel Tax Incentive All
3) Ministry of Agriculture and Agro-based Industry (MOA) TEKUN Nasional (TEKUN) TEKUN Financing All
Lembaga Pertubuhan Peladang (LPP) Tabung Pembangunan Usahaniaga Peladang (TPUP) Agriculture
Bank Pertanian Malaysia Berhad (Agro Bank) Paddy - I Agriculture
Skim Kredit Pengeluaran Makanan Agriculture
Perusahaan Kecil dan Sederhana (IKS/PKS) Agriculture
4) Ministry of Rural &  Regional Development (KKLW) Bank Kerjasama Rakyat (BKRM) / Bank Perusahaan Kecil dan Sederhana Malaysia Berhad (SME Bank) Rural Economy Funding Scheme (SPED) All
Majlis Amanah Rakyat (MARA) Skim Pembiayaan Mudah Jaya (SPiM) All
5) Amanah Ikhtiar Malaysia (AIM) Amanah Ikhtiar Malaysia (AIM) Ikhtiar Financing Scheme All
6) Bank Negara Malaysia (BNM) Bank Negara Malaysia (BNM) Micro Enterprise Fund (MEF) All
7) Perbadanan Usahawan Nasional Berhad (PUNB) Perbadanan Usahawan Nasional Berhad (PUNB) SME Scheme (Services, manufacturing & engineering) Manufacturing & Services
PROSPER Usahawan Muda (PUMA) Services (Retail & distributives)

Now, under these ministries, SME funding is further divided into implementers/agencies, resulting in quite a few funding schemes, which in turn, provide to the few specific sectors under them.

The reason for this information is that, if ever you’re interested in taking up a business loan, knowing which ministry, implementer/agency and funding scheme you fall under would ease the process. For the full list and further details of the available funds, visit the SME Corporation Malaysia official website.


Wait, there’s more financial assistance!

As mentioned earlier, on top of SME funding, you could also opt to get an SME loan from financial institutions such as the Hong Leong Bank Business Cash Loan.

This particular facility is unique in the sense that it doesn’t require collateral from you (yes, you read that right!). It also allows you to borrow an amount from RM50,000 up to RM400,000. The money can then be used for your working capital, and the tenure of your loan would be from 1 to 5 years. The best part of all, there’s a CGC Guarantee involved, which means that you now have one less worry.

But what is this ‘CGC’ you ask? It’s an organisation that provides guarantee service to SMEs, therefore making the loan process easier – the Credit Guarantee Corporation, or CGC.

With a majority shareholding by Bank Negara Malaysia, this corporation plays a developmental role in assisting SMEs to obtain funding from financial institutions through its guarantee schemes.

The organisation assesses an applicant’s risk and credit rating and subsequently assists in improving creditworthiness and bankability for more favourable financing and credit terms on their own merit. Basically, if you’re not eligible for a loan, these guys can help you! Click here to find out more about Hong Leong Business Cash Loan.

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About the Author

Team Loanstreet

Run by a professional human-sized team, get resourceful tips & guides from our very own library of financial articles that can help improve your financial lifestyle & make a well-informed money decision. We strive to provide you with the best service in helping you to get the most out of that DUIT!


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