Last Updated on: 22nd November 2023, 07:30 am
If you’re looking for financial assistance to start or grow your small business in Malaysia, the SME fund in Malaysia is a great option to consider. There are initiatives by the Malaysian Government that provides funding and financial support to small and medium enterprises (SMEs) in order to help them grow and expand.
What is SME business financing and what can you use it for?
SME business financing is a type of financial assistance provided to SMEs to help them grow and expand. The Malaysian Government has various initiatives in place to provide funding and support to SMEs, in order to encourage their development and contribute to the economy. The lack of collateral prevents many SMEs from acquiring funding from financial institutions, and they need funding to compete and thrive in the Malaysian economy. That’s where SJPP comes in.
SJPP is a company wholly owned by the Malaysian Government to bridge the gap between SME owners and financial institutions, making it easier to acquire funding. There are many different types of SME business financing schemes available, but they can all be used for the same purpose. This financial assistance can be used for many purposes such as business expansion, additional working capital, purchase of machinery and equipment, research and development, marketing and promotion.
What type of funding schemes are provided by the SME fund in Malaysia?
Targeted Relief and Recovery Facility (TRRF)
Bank Negara Malaysia established financing facilities to help provide relief and support to recovering SMEs that suffered due to the pandemic. This funding was included in the Government’s 2022 budget, and Bank Negara Malaysia announced that they would increase the allocation under their fund by RM4.5 billion.
Bank Negara Malaysia Increased The TRRF Funding To Ease The Financial Burden Caused By COVID-19
The TRRF scheme was upsized from RM6 billion to RM8 billion, with a financing limit of RM500,000 per SME. You are eligible for this scheme if you have a Malaysian SME affected by COVID-19 in these industries:
- Personal Services
- Food & Beverage
- Social Work
- Human Health
- Arts & Entertainment
- Business Services
- Wholesale & Retail Trade
Automation & Digital Guarantee Scheme (ADGS)
The ADGS is a financing guarantee scheme that Bank Negara Malaysia introduced in 2020. The Government are looking to encourage SMEs to automate processes and digitalise their operations. This will help them improve their business efficiency, productivity and competitiveness. The maximum financing amount under this scheme is RM10 million per SME, with a financing tenure of up to 15 years. A fee of 0.75% per annum is charged for this financing guarantee. Your SME will also be protected with a maximum 80% guarantee coverage from the Government of Malaysia.
Bank Negara Malaysia Introduced The ADGS Scheme in 2020
Working Capital Guarantee Scheme (WCGS)
SJPP also have another set of schemes for small business operations called the Working Capital Guarantee Scheme. It is a government guarantee scheme to support SMEs in various industries. The WCGS is one of Malaysia’s most popular business financing schemes due to its low guarantee fee, lower interest rates, and lower cost of obtaining the financing facilities.
Get A Wide Range Of SME Loans For Your Business
The opportunities for this scheme are vast, with a total scheme limit of RM27.5 billion available until 31 December 2025 or upon full utilisation of the financing amount. This scheme is available for all SMEs. SJPP define a non-manufacturing SME as a company with a sales turnover of less than RM20 million or has less than 75 full-time employees. They define a manufacturing SME as a company with a sales turnover of less than RM50 million or has less than 200 workers.
There are several WCGS schemes that cater to specific types of business owners:
- Working Capital Guarantee Scheme – Start-Up (WCGS-SU)
- Working Capital Guarantee Scheme – Bumiputera (WCGS-B)
- Working Capital Guarantee Scheme – Export (WCGS-X)
- Working Capital Guarantee Scheme – Women (WCGS-W)
Working Capital Guarantee Scheme – Start-Up (WCGS-SU)
It was already tough to start a business before, but it got even harder during and after the pandemic. The Malaysian Government have created initiatives to help new and upcoming entrepreneurs get sufficient working capital or capital expenditure. If you want to apply for this scheme, your SME will need to be within six months to two years of operation to be eligible. SJPP will also conduct a mandatory site visit to see how the business operates. SMEs can receive financing anywhere between the fee of RM50,000 to RM500,000 with a 70% guarantee coverage from the participating financial institutions. There is also a guarantee fee of 0.75% per annum which is payable upfront.
The WCGS-SU Provides SME Financing To Start Up Companies
Working Capital Guarantee Scheme – Bumiputera (WCGS-B)
One of the government guarantee schemes is focused on helping develop more Bumiputera-owned businesses. If you are a Bumiputera entrepreneur with at least 51% of the shares of a SME, you are eligible for this financing scheme. You can start applying now until the RM3 billion scheme limit reaches full utilisation. Each business can get financial assistance between RM100,000 and RM3 million, with a guarantee coverage of 80%.
Working Capital Guarantee Scheme – Export (WCGS-X)
The Malaysian Government wants more local companies to reach global markets so the economy can thrive and expand. SMEs that receive at least 30% of their turnover from export-based businesses are eligible to apply for the WCGS-X.
The Malaysian Government Are Promoting The Develpment Of More Export Businesses
The export trade in Malaysia is a top priority, and that’s why there is such a huge scheme limit on this loan. SMEs have until 31 December 2035 or upon full utilisation of the whopping RM1 billion scheme limit. Each business can borrow between RM100,000 to RM10 million, with an 80% guarantee coverage.
Working Capital Guarantee Scheme – Women (WCGS-W)
The Malaysian Government know that women entrepreneurs face unique challenges when starting or expanding their businesses. The WCGS-W was created to help female entrepreneurs with working capital financing of up to RM1 million. To apply, you will need to be a woman who owns at least 51% of the shares of a Malaysian business. The loan tenure is up to 15 years, with a guarantee coverage of 80% from the participating financial institutions. You can apply for this scheme now until 31 December 2025 or until full utilisation of the RM500 million scheme limit.
The WCGS-W Provides Financial Assistance To Aspiring Female Entrepreneurs
What Do You Need Before Your Application?
To apply for any of the financing schemes offered by SJPP, your business needs to have at least 51% of the company’s shares and incorporated under the Registration of Business Act 1956, Companies Act 1965 or 2016 and Limited Liability Partnership Act 2012. Also, you must have a detailed business plan that outlines your proposed use of funds and how it will help your business grow. Most importantly, you must make sure that you have all the necessary documents needed for the application. Missing out on one or two documents can cause you a big hassle, causing you to reapply and taking up more time. So, remember to ask what are all the documents needed and bring all of them (with copies).
Get Financial Assistance For Your Business with the SME Fund Malaysia
With the right financial assistance through an SME fund in Malaysia, your small business can reach new heights.
